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In an order dated 14 May 2004, the Ministry of Finance made the following amendments to the rules governing foreign currency lending by banks' offshore banking units and overseas branches:
When an offshore banking unit (OBU) or overseas branch of a bank extends for-eign-currency credit to a credit customer (an ROC entity or a non-PRC overseas entity), it may accept as collateral a foreign currency time deposit certificate, held by the credit customer, for funds deposited by the credit customer or its ROC parent company with an ROC designated foreign exchange bank.
When an OBU or an overseas branch of a bank extends unsecured foreign-currency credit to a credit customer (an ROC entity or a non-PRC overseas entity), or extends foreign-currency credit secured by a foreign-currency time de-posit certificate of the credit customer or its ROC parent company with a designated for-eign exchange bank, the funds borrowed may not be used for investment, working capital, or guarantees in Mainland China. But this does not include short-term trade financing. If the funds are used for a usance letter of credit for an overseas customer, the place of import named in the letter of credit may be in Mainland China.
