Administrative Measures for the Capital of Commercial Banks

Administrative Measures for the Capital of Commercial Banks

(Issued by Order No. 4 of the National Administration of Financial Regulation on November 1, 2023, coming into force on January 1, 2024)

Chapter I General Provisions

Article 1 To strengthen the capital supervision and administration of commercial banks, maintain the safe and stable operation of the banking system, and protect the interests of depositors, these Measures are made in accordance with the Banking Supervision Law of the People's Republic of China, the Law of the People's Republic of China on Commercial Banks, the Regulation of the People's Republic of China on the Administration of Foreign-funded Banks, and other relevant laws and regulations.

Article 2 These Measures shall apply to commercial banks legally established within the territory of the People's Republic of China.

Article 3 Commercial banks shall ensure that their capital is able to resist risks facing them, including individual risks and systemic risks.

Article 4 Commercial banks shall meet the capital adequacy ratio regulation requirements in these Measures.

Systemically important banks shall also comply with the additional regulatory capital requirements specified in relevant measures.

Article 5 Regulatory capital indicators include capital adequacy ratio and leverage ratio.

For the purpose of these Measures, “capital adequacy ratio” means the ratio of a commercial bank's net capital, held in compliance with these Measures, to its risk-weighted assets.

“Tier 1 capital adequacy ratio” means the ratio of a commercial bank's net Tier 1 capital, held in compliance with these Measures, to its risk-weighted assets.

“Core Tier 1 capital adequacy ratio” means the ratio of a commercial bank's net Core Tier 1 capital, held in compliance with these Measures, to its risk-weighted assets.

"Leverage ratio" means the ratio of the net Tier 1 capital held by a commercial bank that complies with these Measures to the adjusted balance of on- and off-balance sheet assets.

Article 6 Commercial banks are subject to differentiated regulatory capital requirements in accordance with the institutional categorization standards specified in these Measures. Among them, A Group 1 or 2 commercial bank shall meet the regulatory provisions of each chapter and corresponding annexes of these Measures; a Group 3 commercial bank shall meet the regulatory provisions of Annex 23 to these Measures.

(1) "Group 1 commercial bank" means a commercial bank that meets any of the following conditions:

(a) The balance of on- and off-balance sheet assets adjusted for consolidation is 500 billion yuan or more.

(b) The balance of overseas claims and debts is 30 billion yuan or more and 10% or more of the balance of on- and off-balance sheet assets adjusted for consolidation.

(2) "Group 2 commercial bank" means a commercial bank that meets any of the following conditions:

(a) The balance of on- and off-balance sheet assets adjusted for consolidation is 10 billion yuan or more, and does not meet the conditions for a Group 1 commercial bank.

(b) The balance of on- and off-balance sheet assets adjusted for consolidation is less than 10 billion yuan, but the balance of overseas claims and debts is more than 0.

(3) "Group 3 commercial bank" means a commercial bank of which the balance of on- and off-balance sheet assets adjusted for consolidation is less than 10 billion yuan, and the balance of overseas claims and debts is 0.

The adjusted balance of on- and off-balance sheet assets is calculated in accordance with Article 23 of these Measures.

"Overseas claims and debts" means the sum of the overseas claims and debts of the bank. "Overseas claims" means the final overseas claims, which are the direct overseas claims held by the bank against the governments, central banks, public sector entities, financial institutions, non-financial institutions, and individuals of other countries or regions, less the exposures to a transfer to China; "overseas debts" means the debts owed by the bank to the governments, central banks, public sector entities, financial institutions, non-financial institutions, and individuals of other countries or regions.

The National Administration of Financial Regulation (NAFR) has the power to adjust the above institutional categorization standards in good time based on the overall situation of the banking industry. The NAFR and its local offices have the power to recategorize a bank based on its operation, management, risk level, and other conditions, in light of regulatory judgments.

Article 7 The regulatory capital metrics for a commercial bank shall be calculated on the basis of fully setting aside loan loss provisions and other impairment provisions.

Article 8 Commercial banks shall establish a comprehensive risk management framework and an internal capital adequacy assessment process according to these Measures.

Article 9 The NAFR and its local offices shall conduct supervisory inspections on the regulatory capital metrics and capital management status of commercial banks and adopt corresponding regulatory measures according to these Measures.

Article 10 Commercial banks shall disclose information in accordance with the requirements of these Measures.

Chapter II Calculation and Regulatory Requirements for Regulatory Capital Metrics

Section 1 Calculation Scope of Regulatory Capital Metrics

Article 11 The calculation of the unconsolidated regulatory capital metrics of a commercial bank shall cover all domestic and overseas branch offices of the commercial bank. The calculation of the consolidated regulatory capital metrics shall cover the commercial bank and the financial institutions in which the commercial bank directly or indirectly invests and that complies with these Measures (hereinafter referred to as the “investees”). A commercial bank and its investees together form a banking group.

Article 12 When calculating the consolidated regulatory capital metrics, a commercial bank shall consolidate the following domestic and overseas investees:

(1) An investee in which the commercial bank directly or indirectly holds more than 50% of voting rights.

(2) An investee in which the commercial bank holds 50% or less of the voting rights, but can control more than 50% of its voting rights through an agreement with another holder of voting rights.

(3) An investee in which the commercial bank holds 50% or less of the voting rights, but based on the following facts and circumstances, the voting rights held by the commercial bank are sufficient to enable it to dominate the relevant activities of the investee:

(a) The voting rights held by commercial banks as opposed to those held by other investors and the spread of voting rights held by other investors.

(b) The potential voting rights of the investee held by the commercial bank and another investor, such as convertible corporate bonds and exercisable warrants.

(c) Rights arising from other contractual arrangements.

(d) Other relevant facts and circumstances such as the past exercise of voting rights of the investee.

(4) An investee which is actually controlled by the commercial bank as proved by other evidence.

"Control" means that an investor has power over the investee, enjoys variable return by participating in the investee's relevant activities, and has the ability to use its power over the investee to affect the amount of return.

Article 13 Under any of the following circumstances, investees in which a commercial bank does not have the majority of voting rights or control shall be included in the calculation of consolidated regulatory capital metrics:

(1) Several investees operate business of the same nature, and the overall risk associated with them is sufficient to have a significant impact on the financial condition and risk level of the banking group, although the asset size of each of them only accounts for a small proportion of the overall asset size of the banking group; or

(2) The damage or loss caused by the compliance risk or reputational risk arising in the investees is sufficient to have a significant impact on the reputation of the banking group.

Article 14 Insurance companies which meet the provisions of Article 12 or 13 of these Measures shall not be consolidated.

When a commercial bank calculates consolidated regulatory capital metrics, it shall deduct capital investments in an insurance company in accordance with the methods under Articles 37 and 38 of these Measures.

When a commercial bank calculates unconsolidated regulatory capital metrics, it shall deduct capital investments in an insurance company in accordance with the methods under Article 16 of these Measures.

Article 15 An investee in which a commercial bank holds more than 50% of voting rights or holds control may be excluded from consolidation if it falls under any of the following circumstances:

(1) It has been closed down or declared bankrupt;

(2) It has entered the liquidation process for its termination; or

(3) It is an overseas investee whose capital movement is restricted for the foreign exchange control in the host country or as a result of any unexpected event.

A commercial bank shall deduct capital investments in an investee that falls under the circumstances specified in the preceding paragraph from each tier of its capital. If the investee has a capital deficit, such deficit shall also be deducted.

Article 16 When calculating the unconsolidated regulatory capital metrics, a commercial bank shall deduct all capital investments in financial institutions which meet the provisions of Articles 12 and 13 of these Measures from each tier of capital. If such financial institutions have a capital deficit, such deficit shall also be deducted.

Article 17 Commercial banks shall establish internal rules for the calculation of consolidated and unconsolidated regulatory capital metrics according to these Measures. To adjust the calculation of consolidated or unconsolidated regulatory capital metrics, a commercial bank shall provide reasons and file a report on such adjustment with the NAFR or its local office in a timely manner.

Article 18 The NAFR and its local offices shall have the power to determine and adjust the calculation of the consolidated regulatory capital metrics of a commercial bank on the basis of changes in the equity structure, type of business and risk status of the bank and its subsidiaries.

Section 2 Formulas for Calculation of Regulatory Capital Metrics

Article 19 The formulas for calculating the capital adequacy ratios of a commercial bank is:



Article 20 The formula for calculating the leverage ratio of a commercial bank is:



Article 21 The total capital of a commercial bank includes Tier 1 capital and Tier 2 capital. Among them, Tier 1 capital includes Core Tier 1 capital and other Tier 1 capital. Commercial banks shall calculate each tier of capital and deductions according to the provisions of Chapter III of these Measures.

Article 22 The risk-weighted assets of a commercial bank include credit risk-weighted assets, market risk-weighted assets and operational risk-weighted assets. Commercial banks shall measure their credit risk-weighted assets, market risk-weighted assets and operational risk-weighted assets according to the provisions of Chapters IV, V and VI of these Measures, respectively.

Article 23 The formula for calculating a commercial bank's adjusted balance of on- and off-balance sheet assets is:

Adjusted balance of on- and off-balance sheet assets = adjusted balance of on-balance sheet assets (excluding on-balance sheet derivative instruments and securities financing transactions) + balance of derivative instrument assets + balance of securities financing transaction assets + adjusted balance of off-balance sheet items - Tier 1 capital deductions

The Tier 1 capital deductions made from the adjusted balance of on- and off-balance-sheet assets shall not include the unrealized gains and losses resulting from changes in the fair value of its liabilities due to changes in the commercial bank's credit risk.

The adjusted balance of on- and off-balance sheet assets is calculated in accordance with Annex 19 to these Measures.



Article 24 When calculating the adjusted balance of on- and off-balance-sheet assets, a commercial bank shall not consider credit risk mitigation factors such as collateral, guarantees and credit derivative instruments, unless as otherwise provided for in Annex 19 to these Measures.

Section 3 Regulatory Capital Requirements

Article 25 Regulatory capital adequacy ratio requirements include minimum capital requirement, capital reservation buffer and countercyclical capital requirements, additional capital requirement for systematically important banks, and Pillar 2 capital requirements.

Article 26 Commercial banks' capital adequacy ratio at each tier must meet the following minimum requirements:

(1) Core Tier 1 capital adequacy ratio is not lower than 5%.

(2) Tier 1 capital adequacy ratio is not lower than 6%.

(3) Capital adequacy ratio is not lower than 8%.

Article 27 Commercial banks shall set aside a capital reservation buffer after meeting the minimum capital requirements. Capital reservation buffer shall be 2.5% of risk-weighted assets and be fulfilled by Core Tier 1 capital. The NAFR has the power to adjust capital conservation requirements based on the macroeconomic and financial situation, the overall risk status of the banking industry, the operation, management, and risk level of a single bank, and other conditions.

Commercial banks shall set aside countercyclical capital after meeting the minimum capital requirement and the capital reservation buffer requirement. Rules for setting aside and applying countercyclical capital shall be formulated separately by the People's Bank of China in conjunction with the NAFR.



Article 28 In addition to the minimum capital requirement and the capital reservation buffer and countercyclical capital requirements as set forth in Articles 26 and 27 of these Measures, systematically important banks shall set aside additional capital.

The recognition standards and additional capital requirements for domestic systemically important banks shall be formulated separately by the People's Bank of China in conjunction with the NAFR.

If a commercial bank is identified as both domestic systemically important bank and a global systemically important bank, the additional capital requirement, instead of being superimposed, shall be determined on the principle of the higher of the two.



Article 29 In addition to the capital requirements as set forth in Articles 26, 27 and 28 of these Measures, the NAFR and its local offices shall have the power to impose more prudential capital requirements under the Pillar 2 framework to ensure the full coverage of risks by capital. Such requirements include:

(1) Specific capital requirements raised for some asset portfolios on the basis of risk judgments.

(2) Specific capital requirements raised for a single bank according to the results of supervisory inspections.

The NAFR and its local offices have the power to determine that Pillar 2 capital requirements shall be met by Core Tier 1 capital, other Tier 1 capital or Tier 2 capital.



Article 30 In addition to the above capital adequacy ratio regulatory requirements, the leverage ratio of a commercial bank shall not be less than 4%.

In addition to meeting the above minimum leverage ratio requirement, a systemically important bank shall meet additional leverage ratio requirements.

The additional leverage ratio requirements for domestic systemically important banks shall be formulated separately by the People's Bank of China in conjunction with the NAFR.



Chapter III Definition of Capital

Section 1 Components of Capital

Article 31 Commercial banks shall ensure that the capital instruments issued by them meet the criteria for inclusion as set forth in Annex 1 to these Measures.

Article 32 Core Tier 1 capital includes:

(1) Paid-in capital or common equity.

(2) Capital reserves.

(3) Surplus reserves.

(4) General risk provisions.

(5) Undistributed profits.

(6) Other accumulated comprehensive income.

(7) Qualifying capital from minority interests.

Article 33 Additional Tier 1 capital includes:

(1) Additional Tier 1 capital instruments and their premiums.

(2) Qualifying capital from minority interests.

Article 34 Tier 2 capital includes:

(1) Tier 2 capital instruments and the premiums thereof.

Tier 2 capital instruments issued by a commercial bank may, in the remaining five years before maturity, be included in Tier 2 capital at 100%, 80%, 60%, 40% and 20% respectively.



(2) Excess loss provisions.

(a) For commercial banks using the weight approach to measure credit risk-weighted assets, their excess loss provisions may be included in Tier 2 capital, but may not exceed 1.25% of credit risk-weighted assets.

The term “excess loss provisions” as mentioned in the preceding paragraph means the access of the loss provisions actually set aside by commercial banks over the minimum loss provision requirement. The minimum loss provision requirements shall be separately stipulated by the NAFR.



(b) For commercial banks using the internal rating-based (IRB) approach to measure credit risk-weighted assets, their excess loss provisions may be included in Tier 2 capital, but may not exceed 0.6% of credit risk-weighted assets.

The term “excess loss provisions” as mentioned in the preceding paragraph means the excess of the loss provisions actually set aside by commercial banks over the expected losses.



(3) Qualifying capital from minority interests.

Section 2 Capital Deductions

Article 35 When calculating capital adequacy ratios, a commercial bank shall deduct in full the following items from Core Tier 1 capital:

(1) Goodwill.

(2) Other intangible assets (excluding land use rights).

(3) Net deferred tax assets arising from operating losses.

(4) Shortfall in loan loss provisions.

(a) For commercial banks using the weight approach to measure credit risk-weighted assets, the shortfall of loss provisions means the deficit of the loss provisions actually set aside by commercial banks and the minimum requirement for loss provisions.

(b) For commercial banks using the IRB approach to measure credit risk-weighted assets, the shortfall of loss provisions means the deficit of the loss provisions actually set aside by commercial banks and the expected losses.

(5) Gain on sale related to securitization transactions.

(6) Defined benefit pension fund assets and liabilities.

(7) Own shares held directly or indirectly.

(8) Cash flow hedge reserves that relate to the hedging of items that are not fair valued on the balance sheet. Positive amounts shall be deducted and negative amounts shall be added back.

(9) Unrealized gains and losses resulting from changes in the fair value of liabilities due to changes in the bank's own credit risk.

(10) Prudent valuation adjustment.

Article 36 Capital instruments at any tier reciprocally held by commercial banks by agreement and capital investments at any tier which are determined by the NAFR as inflated capital shall be deducted from the regulatory capital at the corresponding tier.

Additional Tier 1 and Tier 2 capital instruments issued by a commercial bank which are directly or indirectly held by the commercial bank shall be deducted from the regulatory capital at corresponding tiers.

The corresponding deduction means a deduction from a particular tier of capital of a commercial bank. If the net capital at a certain tier is less than the deductible amount, the shortfall shall be deducted from net capital at the next higher tier.



Article 37 If the insignificant minority investments of a commercial bank in the capital of unconsolidated financial institutions in aggregate exceeds 10% of the net Core Tier 1 capital of the bank, the amount above 10% shall be deducted from the regulatory capital at the corresponding tiers.

The term “Insignificant minority investments in capital” means that the sum of the investments (including direct and indirect investments) of a commercial bank in the capital at different tiers of a financial institution account for less than 10% of the paid-in capital (common equity plus the premium thereof) of the financial institution, not meeting the criteria as set forth in Article 12 or 13 of these Measures.



Article 38 If, among the significant minority investments of a commercial bank in the capital of unconsolidated financial institutions, investments in Core Tier 1 capital in aggregate exceed 10% of the net Core Tier 1 capital of the bank, the amount above 10% shall be deducted from the Core Tier 1 capital of the bank; investments in Additional Tier 1 capital and Tier 2 capital shall be deducted in full from the corresponding tiers.

The term “significant minority investments in capital” means that the investments (including direct and indirect investments) of a commercial bank in the capital at different tiers of a financial institution account for 10% or more of the paid-in capital (common equity plus the premium thereof) of the financial institution, not meeting the criteria as set forth in Article 12 or 13 of these Measures.



Article 39 In addition to the deferred tax assets as mentioned in paragraph 3, Article 35 of these Measures, if other net deferred tax assets depending on the future profitability of a commercial bank exceed 10% of the net Core Tier 1 capital of the bank, the amount above 10% shall be deducted from Core Tier 1 capital.

Article 40 According to Articles 38 and 39 of these Measures, the total amount of significant minority investments in the capital of financial institutions and corresponding deferred tax assets which have not been deducted from the Core Tier 1 capital of a commercial bank may not exceed 15% of the net Core Tier 1 capital of the bank.

Article 41 The deduction rules for non-capital debt instruments with external total loss-absorbing capacity held by a commercial bank shall be separately established by the People's Bank of China in conjunction with the NAFR.

Section 3 Treatment of Minority Interests

Article 42 Minority interests directly issued out of subsidiaries of a commercial bank and held by third parties may be partially included in regulatory capital if such subsidiaries are subject to capital supervision.

Article 43 In the Core Tier 1 capital of a subsidiary, minority interests used to fulfill the minimum Core Tier 1 capital requirement and the capital reservation buffer requirement may be included in consolidated Core Tier 1 capital.

The minimum total capital requirement and the capital reservation buffer requirement are the lower of:



(1) The minimum core Tier 1 capital requirement of the subsidiary plus the capital reservation buffer requirement; and

(2) The portion of the consolidated minimum Core Tier 1 capital requirement of the parent company plus the capital reservation buffer requirement that relates to the subsidiary.

Article 44 In the Tier 1 capital of a subsidiary, minority interests used to fulfill the minimum Tier 1 capital requirement and the capital reservation buffer requirement, excluding the portion which has been included in consolidated Core Tier 1 capital, may be included in consolidated Additional Tier 1 capital.

The minimum total capital requirement and the capital reservation buffer requirement are the lower of:



(1) The minimum Tier 1 capital requirement of the subsidiary plus the capital reservation buffer requirement; and

(2) The portion of the consolidated minimum Tier 1 capital requirement of the parent company plus the capital reservation buffer requirement that relates to the subsidiary.

Article 45 In the total capital of a subsidiary, minority interests used to fulfill the minimum total capital requirement and the capital reservation buffer requirement, excluding the portion which has been included in consolidated Tier 1 capital, may be included in consolidated Tier 2 capital.

The minimum total capital requirement and the capital reservation buffer requirement are the lower of:



(1) The minimum total capital requirement of the subsidiary plus the capital reservation buffer requirement; and

(2) The portion of the consolidated minimum total capital requirement of the parent company plus the capital reservation requirement that relates to the subsidiary.

Chapter IV Measurement of Credit Risk-weighted Assets

Section 1 General Rules

Article 46 Commercial banks may adopt the weight approach or the IRB approach to measure credit risk-weighted assets. Commercial banks using the IRB approach to measure credit risk-weighted assets shall meet the provisions of these Measures and have approval from the NAFR or its local office. For exposures not covered by the IRB approach, the weight approach shall be adopted to measure credit risk-weighted assets.

Without the approval of the NAFR or its local office, no commercial bank may change its approach for measuring credit risk-weighted assets.



Article 47 A commercial bank using the weight approach shall implement differentiated rules for categorizing credit exposures in the banking book and measuring credit risk-weighted assets in accordance with the institutional categorization standards under these Measures.

(1) In the case of a Group 1 commercial bank, it shall categorize credit exposures in the banking book in accordance with Annex 2 to these Measures, and measure credit risk-weighted assets in accordance with Section 2 of this chapter.

(2) In the case of a Group 2 commercial bank, it shall, according to paragraph 5 of Article 65, paragraph 2 of Article 66, paragraph 2 of Article 67, paragraph 3 of Article 68, paragraph 3 of Article 69, paragraph 3 of Article 71, paragraph 3 of Article 72, Article 74, paragraph 3 of Article 79, and paragraph 3 of Article 80 of these Measures, categorize and measure commercial bank exposures, other financial institution exposures, corporate exposures, personal exposures, real estate exposures, personal exposures with a currency mismatch, residential real estate exposures issued to individuals, qualified asset-backed bonds, and exposures at default.

Article 48 Commercial banks using the weight approach may prudentially consider the risk compensation effect of credit risk mitigation instruments according to the provisions of Annex 3 to these Measures.

Article 49 For a commercial bank which applies for adopting the IRB approach to measure credit risk-weighted assets, its asset coverage of the IRB approach shall not be less than 50% at the time of submitting the application.

The term “asset coverage of the IRB approach” as mentioned in the preceding paragraph shall be determined according to the following formula:

Asset coverage of the IRB approach = risk-weighted assets measured in the IRB approach / (risk-weighted assets measured in the IRB approach + risk-weighted assets measured in the weight approach for credit exposures not covered by the IRB approach) × 100%



Article 50 Commercial banks using the IRB approach shall categorize credit exposures in the banking book according to the provisions of Annex 4 to these Measures, establish an internal rating system according to the provisions of Annex 5 to these Measures, and measure credit risk-weighted assets according to the provisions of Annex 6 to these Measures.

Commercial banks using the IRB approach may prudentially consider the risk compensation effect of credit risk mitigation instruments according to the provisions of Annex 7 to these Measures.

Commercial banks using the IRB approach may measure the credit risk-weighted assets of specialized lending in the regulatory projection approach according to the provisions of Annex 8 to these Measures.



Article 51 A commercial bank shall measure counterparty credit risk-weighted assets in the banking book and trading book in accordance with Annex 9 to these Measures, and measure the credit risk-weighted assets of central counterparty exposures in accordance with Annex 10 to these Measures.

Article 52 Commercial banks shall measure the credit risk-weighted assets for securitization exposures in the banking book according to the provisions of Annex 11 to these Measures.

Article 53 Commercial banks shall measure the credit risk-weighted assets of asset management products in the banking book according to the provisions of Annex 12 to these Measures.

Section 2 Weight Approach

Article 54 Under the weight approach, credit risk-weighted assets are the sum of the credit risk-weighted assets of on-balance sheet assets and the credit risk-weighted assets of off-balance sheet assets in the banking book.

Article 55 When measuring the risk-weighted assets of on-balance sheet assets, commercial banks shall deduct the corresponding impairment provisions from the book value of assets before multiplying it by the risk weight.

Article 56 When measuring the risk-weighted assets of off-balance sheet assets, commercial banks shall multiply the nominal amounts of off-balance sheet items by a credit conversion factor to obtain equivalent on-balance sheet assets and then measure the risk-weighted assets in the approach used for on-balance sheet assets.

Article 57 The risk weight for cash and cash equivalents is 0%.

Article 58 The risk weight for a commercial bank's exposures to overseas sovereigns and public sector entities shall be determined based on the external credit rating results of the countries or regions where such sovereigns or financial institutions are located.

(1) Exposures to the governments and central banks of other countries or regions: if the rating of the country or region is AA- or above, the risk weight is 0%; if it is below AA- but is A- or above, the risk weight is 20%; if it is below A- but is BBB- or above, the risk weight is 50%; if it is below BBB- but is B- or above, the risk weight is 100%; if it is below B-, the risk weight is 150%; if it is not rated, the risk weight is 100%.

(2) Exposures to overseas public sector entities: if the rating of the country or region where the commercial bank is registered is AA- or above, the risk weight is 20%; if it is below AA- but is A- or above, the risk weight is 50%; if it is below A- but is B- or above, the risk weight is 100%; if it is below B-, the risk weight is 150%; if it is not rated, the risk weight is 100%.

Article 59 The risk weight for a commercial bank's exposures to the Bank for International Settlements, the International Monetary Fund, the European Central Bank, the European Union, the European Stability Mechanism and the European Financial Stabilization Mechanism is 0%.

Article 60 The risk weight for a commercial bank's exposures to a multilateral development bank.

(1) Exposures to an eligible multilateral development bank recognized by the Basel Committee on Banking Supervision is risk weighted at 0%.

(2) Exposures to any other multilateral development bank is risk weighted based on its external credit rating. If the rating is AA- or above, the risk weight is 20%; if it is below AA- but is A- or above, the risk weight is 30%; if it is below A- but is BBB- or above, the risk weight is 50%; if it is below BBB- but is B- or above, the risk weight is 100%; if it is below B-, the risk weight is 150%; if it is not rated, the risk weight is 50%.

Article 61 The risk weight for a commercial bank's exposures to the Central Government of China and the People's Bank of China is 0%.

Article 62 The risk weight for a commercial bank's exposures to a public sector entity that is deemed as the Chinese sovereign.

(1) The risk weight for bonds which are privately placed by financial asset management companies funded by the Central Government of China for the purpose of acquiring the non-performing loans of state-owned banks is 0%.

(2) The risk weight for exposures to the people's governments of provinces (autonomous regions, and municipalities directly under the Central Government) and cities under separate state planning is determined based on the bond type. The risk weight for ordinary bonds is 10%, and the risk weight for special bonds is 20%.

(3) The risk weight for exposures to a public sector entity with its main sources of revenue from the Central Finance, other than the Ministry of Finance and the People's Bank of China, is 20%.

The above risk weight is not applicable to a commercial bank's exposures to industrial and commercial enterprises in which the public sector entities deemed as the Chinese sovereign and as mentioned in the preceding paragraph invest.



Article 63 The risk weight for a commercial bank's exposures to China's ordinary public sector entities recognized by the NAFR is 50%.

The 50% risk weight is not applicable to a commercial bank's exposures to industrial and commercial enterprises in which China's ordinary public sector entities invest.



Article 64 The risk weight for a commercial bank's exposures (excluding subordinated claims) to China's development financial institutions and policy banks is 0%.

Article 65 The risk weight for a commercial bank's exposures (excluding subordinated claims) to other domestic and overseas commercial banks shall be based on the standard credit risk assessment results specified in Annex 2 to these Measures.

(1) The risk weight for exposures to an A+ commercial bank is 30%, and the risk weight for exposures to an A- commercial bank is 40%; or if the exposures have an original maturity of three months or less, or arise from cross-border goods trade with an original maturity of six months or less, the risk weight is 20%.

(2) The risk weight for exposures to an B commercial bank is 75%; or if the exposures have an original maturity of three months or less, or arise from cross-border goods trade with an original maturity of six months or less, the risk weight is 50%.

(3) The risk weight for exposures to a C commercial bank is 150%.

(4) The risk weight for a commercial bank's exposures (excluding subordinated claims) to any other overseas commercial bank shall not be lower than the risk weight corresponding to the sovereign exposures in the country or region where it is registered, but the exposures that have an original maturity of three months or less, or arise from cross-border goods trade with an original maturity of six months or less, are exempt from the floor.

(5) In the case of Group 2 commercial bank, it does not categorize other domestic and overseas commercial banks. The risk weight for exposures to other domestic and overseas commercial banks is 40%; or if the exposures have an original maturity of three months or less, or arise from cross-border goods trade with an original maturity of six months or less, the risk weight is 20%.

The risk weight for a Group 2 commercial bank's exposures to other overseas commercial banks shall comply with paragraph (4) of this article.



Article 66 The risk weight for a commercial bank's exposures (excluding subordinated claims) to other domestic and overseas financial institutions is 100%, or the risk weight for exposures to other investment-grade financial institutions that comply with the provisions of Annex 2 to these Measures are 75%.

A Group 2 commercial bank does not separately categorize exposures to other investment-grade financial institutions, but shall measure them according to the risk weight for exposures to other ordinary financial institutions.



Article 67 The risk weight for a commercial bank's exposures to ordinary companies is 100%, the risk weight for exposures to investment-grade companies that comply with the provisions of Annex 2 to these Measures is 75%, the risk weight for exposures to small and medium-sized enterprises is 85%, and the risk weight for exposures to micro and small-sized enterprises is 75%.

A Group 2 commercial bank does not separately categorize exposures to investment-grade financial institutions, but shall measure them according to the risk weight for exposures to ordinary companies.



Article 68 The risk weights for a commercial bank's specialized loans.

(1) The risk weight for object finance exposures and commodities finance exposures is 100%.

(2) The risk weights for project finance exposures.

(a) The risk weight for project finance exposures in the pre-operational phase is 130%.

(b) The risk weight for project finance exposures in the pre-operational phase is 100%.

(3) A Group 2 commercial bank does not separately categorize specialized loans, but shall measure them according to the risk weight for exposures to ordinary companies.

Article 69 The risk weight for a commercial bank's exposures to individual persons.

(1) The risk weight for regulatory retail exposures to individual persons that comply with the provisions of Annex 2 to these Measures is 75%, and the risk weight for exposures to eligible transactors who meet the standards and are individual persons is 45%.

(2) The risk weight for exposures to other individual persons is 100%.

(3) The risk weight for a Group 2 commercial bank's housing mortgage loans to individual persons is 50%. For mortgaged housing property, if the commercial bank grants a complementary loan by mortgage based on the revaluated net value, and the complementary loan is used for real estate investment, the risk weight for the complementary loan is 150%.

Article 70 The risk weight for a commercial bank's real estate development exposures is 150%, or if such exposures comply with the prudential requirements under Part VIII of Annex 2 to these Measures, the risk weight is 100%.

Article 71 The risk weight for a commercial bank's residential real estate exposures.

(1) The risk weights for residential real estate exposures that are not materially dependent on cash flow generated by the property.

(a) For those that comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, if the loan-to-value ratio (LTV) is 50% or less, the risk weight is 20%; if the LTV is more than 50%, but 60% or less, the risk weight is 25%; if the LTV is more than 60%, but 70% or less, the risk weight is 30%; if the LTV is more than 70%, but 80% or less, the risk weight is 35%; if the LTV is more than 80%, but 90% or less, the risk weight is 40 %; if the LTV is more than 90%, but 100% or less, the risk weight is 50%; if it is more than 100%, measurement shall be based on the counterparty risk weight.

(b) For those that do not comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, measurement shall be based on the counterparty risk weight.

(2) The risk weights for residential real estate exposures that are materially dependent on cash flow generated by the property.

(a) For those that comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, if the loan-to-value ratio is 50% or less, the risk weight is 30%; if it is more than 50%, but 60% or less, the risk weight is 35%; if it is more than 60%, but 70% or less, the risk weight is 45%; if it is more than 70%, but 80% or less, the risk weight is 50%; if it is more than 80%, but 90% or less, the risk weight is 60 %; if it is more than 90%, but 100% or less, the risk weight is 75%; if it is more than 100%, the risk weight is 105%.

(b) For those that do not comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, the risk weight is 105%.

(3) A Group 2 commercial bank does not separately categorize residential real estate exposures, but shall measure them according to the counterparty risk weight.

Article 72 The risk weight for a commercial bank's commercial real estate exposures.

(1) The risk weights for residential real estate exposures that are not materially dependent on cash flow generated by the property.

(a) For those that comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, if the loan-to-value ratio is 60% or less, the risk weight is 65%; or if the loan-to-value ratio is more than 65%, measurement shall be based on the counterparty risk weight.

(b) For those that do not comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, measurement shall be based on the counterparty risk weight.

(2) The risk weights for residential real estate exposures that are materially dependent on cash flow generated by the property.

(a) For those that comply with the prudential requirements under Part VIII(5) of Annex 1 to these Measures, if the loan-to-value ratio is 60% or less, the risk weight is 75%; if the loan-to-value ratio is more than 60%, but 80% or less, the risk weight is the greater of 90% and the counterparty risk weight; or if the loan-to-value ratio is more than 80%, the risk weight is 110%.

(b) For those that do not comply with the prudential requirements under Part VIII(5) of Annex 2 to these Measures, the risk weight is 105%.

(3) A Group 2 commercial bank does not separately categorize commercial real estate exposures, but shall measure them according to the counterparty risk weight.

Article 73 The risk weight for a commercial bank's self-use real estate is 100%, and the risk weight for a commercial bank's non-self-use real estate is 400%.

The risk weight for non-self-use real estate held by a commercial bank for exercising its mortgage rights or any other means is 100% within the disposition period prescribed by law.



Article 74 The risk weights for a commercial bank's exposures to individual persons with currency mismatch and for residential real estate exposures issued to individual persons are ......