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China : ICBC Supports Centralized Operation of Foreign Exchange Funds for Multinational Corporations

June 26, 2014

ICBC has recently transferred Sinochem Group s overseas RMB debt to its domestic account based on the policy of the State Administration of Foreign Exchange (SAFE) on the centralized operation and management of foreign exchange funds for multinational corporations, which provided timely funding support for a key investment project of Sinochem Group in China. Nationwide pilot programs to implement the policy were launched on June 1 this year.

The policy on the centralized operation and management of foreign exchange funds for multinational corporations issued by the SAFE includes the following points: First, innovation on the account system of multinational corporations. Multinational corporations are allowed to open master accounts of domestic and international foreign exchange funds concurrently or separately to manage foreign exchange funds of members both at home and abroad, handle collective payments and receipts and netting settlement, and foreign debt or credit line in the accounts can be fully or partially shared. Second, further simplification on document review. The Bank should handle the exchange collection, settlement, purchase and payment of current account based on the full knowledge of customers and business as well as due diligence. Tax record form should be submitted for external payment such as service trade. Third, facilitating the fund accommodation of multinational corporations. International foreign exchange funds master account can make overseas transfer freely, without a limit; under the specified foreign debt and credit line, domestic and international accounts can be interconnected to facilitate the fund transfer within the enterprise.

An ICBC official said that the policy would significantly enhance the operation and management efficiency of multinational corporations. First, centralized fund allocation is an efficient way to leverage resources on domestic and overseas markets. Second, significant decrease of cross-border fund flow and foreign exchange exposure and centralized management of funds scattered both at home and abroad could reduce the financial cost and enhance the financial income. Third, the enterprise could cut down manual operation cost via convenient and favorable trade investment. Fourth, by centralizing financial businesses and resources in the Group, the headquarter could enhance its functions as treasury center and management center, thereby laying a solid foundation for larger-scale global cash management after RMB becomes fully convertible.

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Source: TendersInfo (India)

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