ecns [expanded by feedex.net]: BOC picked to trial cross-border salary payment service in yuan

ecns [expanded by feedex.net]

ecns

BOC picked to trial cross-border salary payment service in yuan
http://www.ecns.cn/business/2013/07-26/74839.shtml
Jul 26th 2013, 04:31



2013-07-26 13:31 Shanghai Daily Web Editor: qindexing


In a further relaxation of foreign exchange controls, Bank of China has been chosen to launch a pilot program to assist the overseas arms of Chinese enterprises to make cross-border salary payments to their employees on China's mainland in yuan, regardless of the existing daily limit.


The overseas subsidiaries of Chinese companies now have a new tool to channel back funds from offshore markets, through which they can make regular remuneration payments, including wages, allowances and bonuses, to their employees on the mainland in yuan.


Such cross-border transactions are not subject to the current daily limit of 80,000 yuan (US$12,956) per individual, which was set by the State Administration of Foreign Exchange for personal cross-border remittance in the Chinese currency.


BOC, the nation's biggest foreign exchange bank, is the pilot institution to roll out the new service as China speeds up yuan globalization, according to a bank source.


The new service aims to enhance cross-border liquidity management of Chinese companies, as well as to boost the backflow of offshore yuan to the Chinese mainland.


By the end of April BOC's branches in Paris and Moscow had made about 34.3 million yuan of salary payments to the mainland for their clients' overseas affiliates, including big Chinese oil companies and technology giants.


However, at this stage, the pilot remittance service is only limited to clients that have accounts with BOC's Guangzhou branch, indicating authorities' caution in testing the waters.


Financial regulators launched a pilot program in south China's Guangdong Province earlier this year that allowed the Guangzhou branches of a few banks, including BOC, to make yuan transfers to Hong Kong for individual clients.


In addition to the regulated yearly limit of US$50,000 for personal cross-border transfers, the regulators granted an additional quota of 300,000 yuan, according to the source.


With China speeding up yuan internationalization to cut its dependence on the US dollar, the relaxation of rules, such as the new measures launched by the central bank that simplify the documentation of inter-company lending in cross-border yuan, will have a major impact on corporate banking.


The pilot in Guangdong represents the latest moves by the government to relax controls on the consumer banking side that also facilitates two-way yuan flow.





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