On 28 April 2013, SAFE promulgated the Administrative Measures for the Registration of Foreign Debt and an appendix thereto, the Operational Guidelines for the Registration of Foreign Debt （“New Rules on Foreign Debt”）。 Under the New Rules on Foreign Debt, borrowers are administered as three different groups: government finance agencies, banks, and non-bank borrowers. The New Rules on Foreign Debt have abolished some of the foreign debt approval requirements, clarified previous uncertainties in the practice of foreign debt registration and administration, and consolidated previous regulations on foreign debt registration and administration. The New Rules on Foreign Debt will come into effect on 13 March 2013.
The key changes in the New Rules on Foreign Debt are as follows:
Abolishment of Some Foreign Debt Approval Requirements: The New Rules on Foreign Debt have simplified procedures for foreign debt registration. Non-bank borrowers are still required to register foreign debt with their local SAFE; however, it is no longer necessary to obtain approval from SAFE to open a designated account for foreign debt, and they are not required to register each drawdown of foreign debt, and carry out approval formalities for conversion of loan proceeds into RMB and repayment of principal and interests. Instead, after the foreign debt registration, non-bank borrowers may open account, make drawdown, conversion and repayment with the account banks directly.
Clarification on Conversion of Proceeds of Foreign Debt: The New Rules on Foreign Debt explicitly provide that proceeds of foreign debt borrowed by foreign invested enterprises may be converted into RMB directly by the account bank when making RMB payments that conform to the regulatory requirements. However, unless otherwise stipulated, foreign debt borrowed by onshore financial institutions and Chinese enterprises （“FIEs”） in foreign exchange may not be converted into RMB.