The State Council Issued The Notice Of Strengthening The Management Of Local Government Financing Platform Companies.

According to the news of the Chinese government network, the State Council issued the notice on strengthening the management of local government financing platform companies. The full text of the notice is as follows:

State Council on strengthening local government financing platform companies

Notification of management related issues

Guo Fa [2010] 19

The people's governments of all provinces, autonomous regions and municipalities directly under the central government, ministries and commissions under the State Council, and institutions directly under the State Council:

In recent years, the local government financing platform company (by the local government and its departments and agencies, etc., has been established through financial appropriation or injection of assets such as land and equity to undertake the financing function of government investment projects and has an independent legal entity qualification). It has raised funds for local economic and social development through debt financing, and has played a positive role in strengthening infrastructure construction and coping with the impact of the international financial crisis. But at the same time, there have also been some problems that need urgent attention. The main reason is that the scale of debt financing of the financing platform companies is expanding rapidly, and the operation is not standard enough. Local governments provide guarantees in violation or disguised form, and the risk of debt repayment is increasing day by day. In order to effectively prevent financial and financial risks, strengthen the management of local government financing platform companies, and maintain sustained and healthy economic development and social stability, relevant issues are hereby notified as follows:

First, we should promptly clean up, verify and properly handle the debts of financing platform companies.

Local governments at all levels should conduct a comprehensive clean-up of the debt of the financing platform companies, and properly handle the debt repayment and subsequent financing of construction projects according to the principles of classified management and differentiated treatment.

The debts included in the liquidation scope include debts directly borrowed by the financing platform company, delinquent or supported by credit support such as guarantee and repurchase. The debts are classified and classified according to the following principles: (1) financing platform companies borrow money for undertaking public interest projects and rely mainly on financial funds to repay debts; (2) financing platform companies are responsible for borrowing loans from public interest projects, and projects have stable debt receipts and rely mainly on their own income repayment debts; (3) financing platform companies are responsible for borrowing debts from non public interest projects.

For projects under construction which are originally funded by financing platform companies, the follow-up funds should be properly handled according to different situations. Local governments at all levels must strictly examine the investment budgets and sources of funds, and all kinds of funds should be concentrated on Project Renewal and ending, strictly controlling new projects and preventing "half pulling" projects. After the local government has examined and approved, the source of repayment depends mainly on the public funds of public finance. In addition to the laws and regulations of the State Council, it is no longer necessary to continue financing through financing platform companies. It is necessary to guide the social capital to solve the problem of construction funds through the budget and other channels. For other projects under construction, the original loan banks should be re examined. Projects that meet the requirements of the state's industrial policies, land policies, environmental protection policies, credit Prudential Management Regulations and macro-control policies should continue to provide loans and push forward project construction according to the agreement. For those projects that do not meet the above requirements, local governments should clear up and properly handle them as soon as possible.

For the loan of financing platform companies, banking financial institutions should adhere to the principle of "package by package, check by item, reassess, rectify and preserve", and take timely remedial measures to ensure the safety of credit assets.

Local governments at all levels should take effective measures to implement debtors' debt paying responsibilities. The debts of the financing platform companies should be repaid in accordance with the agreement. They should not unilaterally change the original debt and debt relationship, nor transfer debt paying responsibilities and evading debts. Financing platform companies should co-ordinate the arrangement of funds, formulate a debt repayment plan, specify the time limit for debt repayment, and assume the responsibility of paying debts and paying interest.

Two, clean up the financing platform companies.

The financing platform companies that have been set up before the issuance of this notice shall be cleared up according to the following requirements: the financing platform companies that only undertake the financing tasks of public welfare projects and rely mainly on financial funds to repay their debts, shall not undertake any financing tasks in the future, and the relevant local governments should properly handle the debts after the explicit debt repayment responsibilities and the implementation of repayment measures; and the financing platform companies that undertake the financing tasks of the public welfare projects and undertake the construction and operation tasks of public welfare projects shall divestiture the financing industry after the implementation of the debt paying responsibilities and measures, and no longer retain the functions of the financing platform. The financing platform company that undertakes the financing of public welfare projects with stable operating income and relies mainly on its own income to repay debts, and the financing platform company that undertakes the financing of non commonweal projects, should make full use of the relevant provisions of the company law of the People's Republic of China to enrich the capital of the company, improve the governance structure and achieve commercial operation. It is necessary to promote diversification of the investment entities and improve the ownership structure of the financing platform companies through the introduction of private investment and other market-oriented channels. For other financing platform companies with different types of financing functions, they should also be cleaned up according to the above principles.

In the future, if local governments really need to set up financing platform companies, they must strictly follow relevant laws and regulations, inject capital in full, and public assets such as schools, hospitals and parks should not be injected into capital platform companies as capital.

Three, strengthen the financing management of financing platform companies and credit management of banking financial institutions.

The financing and guarantee of financing platform companies must strictly enforce relevant regulations. After the liquidation and consolidation, the financing platform of the company must be standardized. The application for loans to the banking financial institutions must be carried out to the project, with the Incorporated Company as the main body of the loan, and in line with the relevant loan conditions. Financing projects must meet the requirements of national macro-control policies, development plans, industry plans, industrial policies, industry access standards and general land use plans, etc., and perform the project approval, approval or filing procedures according to the relevant provisions of the state. We must strictly use funds in accordance with the prescribed purposes, stressing efficiency and steady operation.

Banking financial institutions should strictly regulate credit management, and effectively strengthen risk identification and risk management. We should implement the conditions for the borrowers to enter into the business, perform the examination and approval procedures according to the principle of commercialization, and carefully assess the borrowers' financial capability and repayment sources. Where there is no stable cash flow as the source of repayment, no loan shall be granted. The new loan to the financing platform company should directly correspond to the project and strictly enforce the relevant state capital requirements. We must strictly enforce loan concentration requirements, strengthen loan risk control, adhere to the principles, procedures and standards of credit approval. In accordance with the requirements, the rights of the project assets or projects that are eligible for the pledge will be used as loan guarantees. It is necessary to seriously examine the loan investment and ensure that loans meet the requirements of national planning and industrial development policies. We should strengthen post loan management and intensify supervision and inspection. We should appropriately raise the risk weights of loans for financing platform companies, and strictly classify loan quality according to different situations.

Four, resolutely curb violations committed by local governments.

The local government has limited responsibility to the financing platform company in the scope of capital contribution, so as to realize the internalization of debt risk of the financing platform company. It is necessary to strictly implement the relevant laws and regulations of the People's Republic of China guarantee law and other regulations. Except for other provisions of the law and the State Council, local governments at all levels and their subordinate departments, institutions and financial subsidy institutions that rely mainly on financial allocations shall not guarantee the financing activities of financing platform companies by means of state-owned assets such as financial revenue, administrative units, etc., or any other direct or indirect forms.

Five, strengthen organizational leadership and ensure the implementation of the work.

All regions and departments should proceed from the overall situation, firmly establish the Scientific Outlook on Development and correct view of achievements, fully understand the importance and urgency of strengthening the management work of financing platform companies, unify their thoughts, strengthen leadership and organize them carefully, and conscientiously carry out their implementation in the light of the actual conditions of their respective regions and departments. The Ministry of finance, the development and Reform Commission, the people's Bank of China and the Banking Regulatory Commission and other departments and institutions should work hard to formulate specific implementation plans, improve relevant policies and strengthen guidance and supervision over this work. The Ministry of finance should speed up the establishment of financing platform company debt management information system, accounting and statistical reporting system, and the regular reporting system of debt information of financing platform companies, so as to realize the full caliber management and dynamic monitoring of debt financing platform companies. Auditing departments should strengthen auditing supervision over financing platform companies. It is necessary to study the establishment of local government debt scale management and risk early warning mechanism, including local government debt revenue and expenditure into budget management, and gradually form a local government debt financing mechanism that is compatible with the socialist market economic system, standardized management and efficient operation.

Local governments at all levels and relevant departments and units must strictly abide by the provisions of the legal system so as to ensure that there is a law to follow and the law must be investigated. The problems that should be checked out in the clearance rules should be corrected in time. The regulations of the People's Republic of China budget law, the People's Republic of China guarantee law, and the People's Republic of China commercial bank law should be dealt with severely according to the regulations, and the responsibility of the responsible persons should be dealt with in accordance with the regulations.

The people's governments of all provinces (autonomous regions and municipalities) should conscientiously perform their duties and promptly implement relevant work. They will report the work to the State Council before December 31, 2010, and send them to the Ministry of finance, the development and Reform Commission, the people's Bank of China and the Banking Regulatory Commission.

State Council

June 10th, two