The China National Financial Regulatory Authority has announced its decision to strengthen the capital regulations for banks as part of the effort to combat financial risks. This move, which will come into effect on January 1, aims to enhance banks’ risk management and better serve the economy.
These measures taken may enable banks to more accurately reflect the overall risks in their capital adequacy ratios. The regulatory body emphasizes the importance of this step in helping banks establish a more solid financial foundation.
Capital Control System Activated
These regulations establish a differentiated capital control system, imposing higher capital requirements on larger banks and significantly offshore enterprises. Additionally, banks might be required to set aside higher provisions for non-loan assets.
The regulatory body will grant banks an additional two-year period to fully comply with the new provisioning requirements. This timeframe will offer banks an opportunity to complete the compliance process and adapt to the new regulations.