Q1: Could you please brief us on the background and principles of the Detailed Rules?
A1: As the first administrative regulation in the financial sector issued after the Central Financial Work Conference, the Regulations on the Supervision and Administration of Non-bank Payment Institutions (hereinafter referred to as the Regulations) aims to comprehensively strengthen regulation across the whole process, full chain and all areas of non-bank payment institutions (hereinafter referred to as payment institutions), and sets out general provisions on the access, business rules and regulatory responsibilities of payment institutions. The Detailed Rules for the Implementation of the Regulations on the Supervision and Administration of Non-bank Payment Institutions (hereinafter referred to as the Detailed Rules), as an important departmental regulation supporting the Regulations, further refines the relevant provisions to ensure solid implementation of the Regulations , thus promoting the regulated and healthy development of the sector.
In drafting the Detailed Rules, we mainly adhered to the following principles. First, we remain committed to law-based administration. We refined the requirements of the Regulations for administrative licensing items, making administrative licensing open and transparent with sufficient basis and standardized procedures. Also, we optimized the approval procedures for changes to improve the efficiency. Second, we upheld the principle of seeking progress while maintaining stability. We ensured the continuity of our regulatory work and the consistency in our macro policy orientations, and provided provisions for the smooth transition from old business types to new ones by setting up a reasonable transition period. Third, we attached equal importance to regulation and development. We struck a good balance between development and security, and moderately raised the requirements for registered capital and net assets of payment institutions based on market reality to enhance their risk prevention capabilities, so as to guide them to focus on their core business of payment, thereby improving the quality of their services for the real economy.
Q2: What are the main contents of the Detailed Rules?
A2: The Detailed Rules consists of 77 articles under six chapters. Chapter 1 General Principles clarifies the basis for the setting of the Detailed Rules and the regulatory authorities over payment institutions. Chapter 2 The Establishment, Change and Termination of Payment Institutions specifies such requirements as application materials, handling procedures and time limits for relevant administrative licensing items of payment institutions, and sets out provisions for payment business permit management and branch reporting. Chapter 3 Rules for the Payment Business refines the division mode of payment businesses and makes detailed provisions for the transition from old business types to new ones, the completeness of the system, and the requirements for the ratio of net assets to the average daily balance of provisions. Chapter 4 Supervision and Administration of Payment Institutions pinpoints the applicable procedural requirements for the reporting of major issues and risk events, law enforcement inspections, etc., with a view to strengthening the penetrating regulation of equities of payment institutions. Chapter 5 Legal Responsibilities sets out powers and measures for the People’s Bank of China (PBOC) and its branches to penalize payment institutions and their major shareholders, controlling shareholders and actual controllers for their irregularities. Chapter 6 Ancillary Provisions outlines the arrangements for the transition period.
Q3: The Detailed Rules sets different transition periods for payment institutions. What are the considerations?
A3: According to the Administrative Measures for the Payment Services Provided by Non-financial Institutions (PBOC Decree No.2 [2010]), a payment business permit shall be valid for 5 years from the date of issuance. The expiration date of the payment business permit varies depending on the time of establishment of the payment institution. To protect the rights of the administrative licensee, the transition period is set from the date of the Detailed Rules coming into force to the expiration date of the payment business permit. If a payment institution established before the implementation of the Regulations intends to continue to engage in part or all of the approved payment businesses, it shall apply to the PBOC for the renewal of a long-term valid payment business permit. In addition, some payment institutions need a certain period of time to make adjustment so as to meet the requirements for net assets. To ensure a smooth transition, the Detailed Rules also sets a same transition period for the adjustment of the ratio of net assets to the average daily balance of provisions.
Considering that the payment business permits of 17 payment institutions expire on July 9, 2024 and March 25, 2025 respectively, which are relatively close to the date of the Detailed Rules entering into force, the transition periods for these payment institutions are extended to 12 months to ensure they have sufficient preparation time.
Q4: What does the PBOC plan to do after the launch of the Detailed Rules?
A4: The PBOC will strictly implement the provisions stated in the Regulations and the Detailed Rules, strengthen the comprehensive regulation of the non-bank payment sector, and promote its law-based and standardized development, so as to better protect the legitimate rights and interests of users based on the mandate of serving the real economy. First, we will step up efforts to promote publicity and interpretation, answer questions in a timely manner and respond to concerns from various parties. Second, we will take prompt measures to improve relevant systems and regulations, and make significant efforts in enacting, revising, abolishing, and interpreting relevant institutional documents on the basis of fully soliciting opinions from all parties, so as to ensure the effective coordination of various policies. Third, we will strengthen the implementation of policies. According to relevant work arrangements, we will renew payment business permits in accordance with laws and procedures, urge payment institutions to firmly adhere to the bottom line of compliance, and thus facilitate the healthy and sustainable development of the non-bank payment sector.
