Banking updates


Contributed by Jingtian & Gongcheng
State Council relaxes requirements for foreign-invested banks to conduct Rmb business in Beijing
  • China
  • January 19 2018

The State Council recently announced a pilot programme that has lifted the requirements on foreign-invested banks entering the renminbi yuan (Rmb) business market in Beijing until May 5 2018. As a result, foreign-invested banks are no long required to have operated for more than one year before applying to conduct Rmb business in Beijing. The programme is another step towards encouraging foreign investment in the financial sector.

PBOC announces revised measures for registration of pledge of accounts receivable
  • China
  • November 24 2017

The People's Bank of China recently released revised measures for the registration of a pledge of accounts receivable. The revised measures have broadened the definition of 'accounts receivable' and introduced a procedure for registering to transfer accounts receivable. For flexibility and convenience, the revised measures also adjust the registration term of a pledge of accounts receivable and extend the time limit for notifying a pledgee of any objection to its registration.

New policy on ICO fundraising activities
  • China
  • September 29 2017

The Internet Financial Risk Special Rectification Work Leading Group Office recently issued a notice on rectification work regarding tokens issuance financing. In addition, a number of national authorities issued a joint announcement on the prevention of financial risks associated with token issuance. Following issuance of the notice and the joint announcement, initial coin offerings are now an illegal and unregulated method of raising money.

PBOC to establish unified network platform for all non-bank payment entities
  • China
  • September 01 2017

The People's Bank of China (PBOC) recently issued Announcement 209/2017 regarding the establishment of a non-bank payment entities network payment and clearing platform. The announcement is a major step towards the PBOC's establishment of a centralised and transparent online payment system with unified regulatory requirements for all non-bank payment entities, which should enable the PBOC to control any financial risks that may arise in the market.

Amended foreign investment industry guidance catalogue
  • China
  • July 28 2017

The amended Catalogue for the Guidance of Foreign Investment Industries was recently promulgated by the National Development and Reform Commission and the Ministry of Commerce. The amended catalogue imposes a number of restrictions on single foreign financial institutions, multiple foreign financial institutions and foreign commercial banks wanting to invest in the Chinese banking sector.


Launching an ICO through Cyprus – an overview
  • Cyprus
  • November 10 2017

Unlike many other popular initial coin offering (ICO) jurisdictions, Cyprus is an EU member state and, as such, founders of ICOs must comply with the panoply of single market regulation. However, as they are largely unregulated at present, the benefits of launching an ICO in Cyprus can be significant. These include an EU base, a central time zone, access to Cyprus's vast array of tax treaties and white-list status among tax authorities globally.

EU Banking Recovery and Resolution Directive: the Cyprus position
  • Cyprus
  • January 27 2017

In 2013 Parliament passed the Resolution of Credit and Other Institutions Law to facilitate the restoration of the viability of the Cyprus financial sector. However, this law was enacted before the implementation of the EU Banking Recovery and Resolution Directive. Parliament has now enacted the new Law for the Resolution of Credit Institutions and Investment Companies in order to align Cyprus national law fully with EU provisions.

Passporting through Cyprus post-Brexit
  • Cyprus
  • November 18 2016

The most pressing Brexit concern for UK-based credit and financial institutions is the terms on which they will continue to have access to the EU single market and related passporting rights if and when the United Kingdom leaves the European Union. Cyprus can offer a solution to international firms and institutions seeking certainty over EU single market access.

European Union

Contributed by Cleary Gottlieb Steen & Hamilton LLP
Beyond bail-in: reform of bank creditor hierarchy in European Union
  • European Union
  • January 26 2018

The European Commission recently published a legislative proposal amending the Bank Recovery and Resolution Directive to modify creditor hierarchy in insolvency with a view to facilitating the resolution of EU credit institutions. The proposal, which was fast tracked, resulted in the adoption of EU Directive 2017/2399, which amends the Bank Recovery and Resolution Directive as regards the ranking of debt instruments in insolvency.


Contributed by Herbert Smith Freehills Germany LLP
Negative interest on existing cash deposits imposed by change in terms and conditions unlawful
  • Germany
  • February 16 2018

The Tubingen Regional Court recently held that negative interest on a consumer's existing cash deposits imposed by a German bank by unilaterally changing the bank's general terms and conditions was unlawful. According to the court, the defendant bank violated the rules of the general terms and conditions regime because it did not differentiate between existing deposits and newly deposited cash.

EAPO regulation: initial experiences with German courts
  • Germany
  • January 05 2018

As of January 2018, the EU regulation which established a new European Account Preservation Order (EAPO) procedure will have been effective and in force for one year. In Germany, the most important conclusion which can be drawn from the past year is that the German courts are adopting EAPOs. However, as the procedure is still fairly new to the courts, it has taken time and effort on the part of creditors.

Are arrangement and processing fee clauses in commercial loan agreements invalid?
  • Germany
  • September 08 2017

The Federal Court of Justice recently issued two rulings declaring that processing fee clauses in standardised commercial loan agreements are invalid as they unreasonably disadvantage borrowers. Previously, the majority of lower German court rulings had upheld the validity of such clauses in commercial loan agreements. Going forward, lenders have a number of options to deal with the issues raised in these new court decisions.


Contributed by Shardul Amarchand Mangaldas & Co
Changes to merchant discount rate framework: impact on stakeholders
  • India
  • March 02 2018

The Reserve Bank of India and the Ministry of Electronics and Information Technology recently established a new regulatory framework for setting limits on and payments of merchant discount rates and encouraging digital payments. Rates will now be determined based not only on the basis of transaction value, but also on turnover. However, in its effort to curb transaction costs for merchants, the government risks imposing significant charges on other system participants.

Licences for pre-paid payment instruments temporarily suspended
  • India
  • December 23 2016

The Reserve Bank of India (RBI) recently issued a press release stating that given the rapid changes to the payments solutions space, it was in the process of reviewing the regulatory framework governing pre-paid payment instruments. The RBI also stated that it will grant no new licences for the issue of pre-paid payment instruments until the end of February 2017. This temporary suspension will not apply to applications made by new small finance banks and payment banks.

Supreme Court rules on post-dated cheque given as security for repayment of loan instalment
  • India
  • December 23 2016

The Supreme Court recently held that a dishonoured post-dated cheque for repayment of a loan instalment that was described as 'security' in the loan agreement was covered by the criminal liability set out in Section 138 of the Negotiable Instruments Act. While deciding whether dishonoured cheques issued to discharge existing liability fall under Section 138, the court explained that the question of whether a post-dated cheque is for "discharge of debt or liability" depends on the nature of the transaction.

RBI guidelines for at-will licensing of private banks – key features
  • India
  • September 30 2016

The Reserve Bank of India recently issued guidelines for the at-will licensing of universal banks in the private sector which, for the first time, will allow applicants to apply for a banking licence at will. The at-will regime will lead to increased transparency, better innovation and more realistic valuations, and is a significant step towards a healthier licensing regime for new private banks.

Bank employees as public servants: analysis of Ramesh Geli
  • India
  • April 22 2016

The Supreme Court recently clarified that all bank employees (including those employed by private sector banks) will be treated as public servants for the purposes of anti-corruption law. This ruling has significant implications, as all employees, officers and key managerial personnel of banking companies (ie, private and public sector banks and branches of foreign banks) will now come under the purview of the Prevention of Corruption Act.