China optimizes rules for financial leasing firms

China has further optimized the regulation of financial leasing companies to prevent financial risks, improve financial services, and promote high-quality development of the industry.

According to a newly revised regulation that will officially take effect on Nov 11, the country will increase minimum registered capital requirement for financial leasing companies to enhance their ability to withstand risks, and appropriately raise the market access preconditions for their major investors, such as total assets, revenues, and registered capital, along with the minimum shareholding ratio requirement.

For instance, the minimum shareholding ratio of the major investor in a financial leasing company will be raised to no less than 51 percent, from no less than 30 percent currently.

The new regulation also added State-owned capital investment and operating companies, State-owned financial capital investment and operating companies, and overseas manufacturing enterprises as eligible major investors for financial leasing companies.

The respective scope of basic and specialized businesses of financial leasing companies has been further delineated in the new regulation based on the levels of risk and the required professional competence.

Besides, the new regulation has also enhanced supervision on corporate governance and risk management of financial leasing companies. Some regulatory indicators have been optimized and added, and the requirements for regulatory ratings and mandatory regulatory measures have been specified.

An official of the National Financial Regulatory Administration said on Friday in an online statement that the new regulation is a crucial step to strengthen financial supervision, prevent and control financial risks, and refine the positioning of financial institutions.

The NFRA will continue to enhance supervision, uphold the political and people-oriented nature of financial work, guide financial leasing companies in the implementation of the new regulation, and steer financial leasing companies in adhering to the functional positioning of combining financing with leasing, so that they will enhance specialized financial services, support large-scale equipment upgrades, facilitate the resilience of industrial and supply chains, and serve the high-quality development of the real economy, the official said.