Peoples Bank of China Measures for Settlement by Domestic Letter of Credit 中国银行国内信用证结算办法 Promulgating Institution: Peoples Bank of China颁布机关: 中国人民银行 Document Number: Yin Fa  No. 265 文 号: 银发265号 PromulPeople's Bank of China Measures for Settlement by
Domestic Letter of Credit
Promulgating Institution: People's Bank of China颁布机关: 中国人民银行
Document Number: Yin Fa  No. 265 文 号: 银发265号
Promulgating Date: 07/16/1997 颁布时间: 07/16/1997
Effective Date: 08/01/1997 实施时间: 08/01/1997
Validity Status: Valid 效力状态: 有效
Chapter 1 General Provisions第一章 总则
Article 1 These Measures are formulated in accordance with the Law of the People's Republic of China on the People's Bank of China and other applicable laws and regulations, with a view to adapting to the needs of domestic trading activities and boosting the healthy development of the socialist market economy of China.
Article 2 For the purpose of these Measures, a letter of credit (L/C) shall refer to an undertaking issued by an issuing bank at the request of an applicant to pay an amount of money against documents that are in compliance with the terms and conditions in the L/C.
The L/C as prescribed in the preceding paragraph shall be an irrevocable and non-transferrable documentary L/C.
Article 3 These Measures shall apply to settlement by L/C between and among domestic enterprises for commodity trading.
Article 4 Head offices of commercial banks that have been approved by the People's Bank of China to operate settlement business, and branch offices that have been approved by the head offices of commercial banks to operate settlement business by L/C may carry out settlement business by L/C.
Banking institutions without approval and urban credit cooperatives, rural credit cooperatives as well as other non-banking financial institutions shall not engage in settlement business by L/C.
Article 5 The parties concerned in settlement by L/C shall comply with laws, regulations and these Measures, and may not prejudice social and public interests.
The parties concerned in settlement by L/C shall follow the principle of good faith, perform their obligations conscientiously, and may not involve in fraudulent activities in violation of the law by means of L/C.
Article 6 A L/C shall be used for transfer settlement only, and not for cash withdrawal.
Article 7 A L/C and the underlying purchase and sales contract are independent of each other. When handling L/C business, banks shall not be bounded by such purchase and sales contracts.
Undertakings given by a bank to make payments, negotiations or to perform other obligations under a L/C shall not be bounded by the relationship between the applicant and the issuing bank, and that between the applicant and the beneficiary.
Under no circumstances shall a beneficiary take advantage of the contractual relationship between the banks or between the applicant and the issuing bank.
Article 8 In the settlement by L/C, the parties concerned deal with documents rather than the goods and labor services relating thereto.
Chapter 2 Issuance and Notification第二章 开证与通知
Article 9 Application for issuance第九条 开证申请
When an applicant intends to use a L/C, the said applicant shall entrust its deposit bank with the issuance business.
When an applicant applies for issuance, the said applicant shall fill out an application form of issuance and an undertaking of applicants of L/C, and submit the relevant purchase and sales contract. The matters included in the application form of issuance and the undertaking of applicants of L/C shall be complete and clear, and the said form and undertaking shall be signed and sealed by the applicant. The signature and seal shall be identical with those reserved by the bank in advance.
The application form of issuance and the undertaking of applicants of L/C shall constitute the basis for an issuing bank to issue a L/C to beneficiaries, and shall also serve as contractual documents specifying the respective rights and obligations of the issuing bank and the applicant.
Article 10 Acceptance of an issuance application 第十条 受理开证
An issuing bank shall decide whether to accept the issuance business on the basis of the application form of issuance and the undertaking of applicants of L/C and the purchase and sales contract submitted by an applicant. When the issuing bank decides to accept the business, it shall charge the applicant a security deposit of no lower than 20% of the amount to be issued, and may, on the basis of the credit standing of the applicant, require the applicant to provide a mortgage, a pledge, or a letter of guarantee produced by other financial institutions.
An issuing bank shall, while issuing a L/C, charge an applicant possessing fees and postal fees pursuant to relevant provisions.
Article 11 Basic terms and conditions of a L/C第十一条 信用证的基本条款
A L/C shall set out the terms and conditions as follows: 信用证应包括如下条款:
(1) name and address of the issuing bank. (一)开证行名称及地址。
(2) date of issuance. (二)开证日期。
(3) L/C number. (三)信用证编号。
(4) irrevocable and non-transferrable L/C. (四)不可撤销、不可转让信用证。
(5) name and address of the applicant. (五)开证申请人名称及地址。
(6) name and address of the beneficiary. A beneficiary shall be a person entitled to receive the amount indicated on the L/C. In general, the beneficiary shall be the supplier under the purchase and sales contract.
(7) name of the advising bank. An advising bank shall be a bank authorized by the issuing bank to notify the beneficiary of the L/C.
(8) term of validity and valid place of the L/C. The term of validity of a L/C shall be the deadline for the beneficiary to submit documents to the bank, which shall not be longer than six (6) months; and valid place shall be the place designated on the L/C for the submission of documents, i.e. the locus of the negotiating bank or the issuing bank.
(9) document submission date. Document submission date shall be a specific date on which transport documents shall be submitted after shipment of goods as indicated on the L/C. Where such a date is not specified, a bank shall not accept documents submitted later than fifteen (15) days upon the date of shipment.
(10) L/C amount. (十)信用证金额。
(11) methods of payment, i.e. payment at sight , deferred payment or negotiation. A deferred payment L/C shall be paid within a fixed period after the date of shipment, which shall not be longer than six (6) months. Negotiation L/C shall designate the deposit bank of the beneficiary as the negotiating bank hereunder and authorize the same with negotiation.
(12) terms and conditions of carriage: (十二)运输条款:
(a) means of transport; 1、运输方式;
(b) place of shipment and destination of goods; 2、货物装运地和目的地;
(c) whether the goods shall be transported by partial shipment or transshipment. Where the same is not specified, it shall be deemed that partial shipment and transshipment are permitted;
(d) deadline of shipment of goods. Where the same is not specified, the term of validity of the L/C shall be regarded as the deadline of shipment.
(13) description of the goods, including name, quantity and price of the goods.
(14) terms and conditions of the documents, which shall indicate the documents by which payment or negotiation is to be performed, including at least invoices, transport documents or receipts of goods.
(15) other terms and conditions. (十五)其他条款。
(16) statements of guarantee of the issuing bank. (十六)开证行保证文句。
Article 12 Ways of opening a L/C 第十二条 信用证开立方式
A L/C may be opened by post or by telex. A L/C opened by post shall be affixed with the special L/C seal of the issuing bank and the private seal of the handler, given a test key, and sent to the advising bank; a L/C opened by telex shall be given a test key by the issuing bank and sent to the advising bank by telex.
Article 13 Obligations of an issuing bank 第十三条 开证行的义务
After a L/C has been opened and specified documents in compliance with the terms and conditions under the L/C have been submitted to an issuing bank, the issuing bank shall perform the following obligations:
(1) immediate payment shall be made for a L/C of payment at sight;
(2) in the case of a deferred payment L/C, payment shall be made on the due date as indicated on the L/C;
(3) in the case of a negotiation L/C, payment shall be made to the negotiable bank on the due date as indicated on the L/C.
Article 14 Modification of a L/C第十四条 信用证的修改
(1) Application for modification of a L/C
An applicant who wishes to modify any content of an opened L/C shall fill out an application for modification of L/C, an undertaking of applicants for modification of L/C and produce a written certificate containing consent of the beneficiary to such modifications for the original issuing bank of the L/C to specify the contents of modification.
(2) Acceptance of application for modification
Where the modification applied for is to increase the amount covered under the L/C, an issuing bank may require the applicant to increase the security for issuance.
Where the modification applied for is to change the term of validity, the term after modification may not exceed the longest term of a L/C.
The L/C modification form issued by the issuing bank shall indicate the ordinal number of this modification.
(3) Ways of opening L/C modifications
The L/C modification form may be opened by post or by telex. A L/C modification form opened by post shall be affixed with the special L/C seal of the issuing bank and private seal of the handler, given a test key, and sent to the advising bank; a L/C modification form opened by telex shall be given a test key by the issuing bank and sent to the advising bank by telex.
The issuing bank shall send notices of L/C modifications through the advising bank of the original L/C.
(4) The issuing bank shall be bound by the modifications as of the date when the L/C modification form is sent.
(5) The issuing bank shall collect modification processing fees and postal fees from the applicant for the opening of the L/C modification form in accordance with the provisions.
Article 15 Notification of a L/C 第十五条 信用证的通知
(1) Determination of the advising bank
Where the issuing bank and the deposit bank of the beneficiary are within the same banking system, the deposit bank of the beneficiary shall be the advising bank.
Where the issuing bank and the deposit bank of the beneficiary belong to different banking systems, the banking institution within the same system as the deposit bank of the beneficiary and at the same city thereof as determined by the issuing bank shall be the advising bank.
In the event that the issuing bank has no branch belonging to the same banking system at the place of domicile of the deposit bank of the beneficiary, the issuing bank shall choose a banking institution at the place of domicile of the deposit bank to establish the L/C agency relationship, and the chosen agency institution shall serve as the advising bank.
(2) Responsibilities of an advising bank
(a) Upon the receipt of a L/C and a L/C modification form, an advising bank shall verify such apparent authenticity as the authenticity of the signature and seal of the issuing bank and correctness of the test key used. Where no error is found, the advising bank shall fill out the advice of L/C or the advice of modification of L/C and deliver the same to the beneficiary together with the L/C or the L/C modification form.
(b) Where an advising bank finds any inconsistency of the signature and seal in the L/C or L/C modification form, the advising bank shall promptly return the same to the issuing bank and inform the issuing bank of such inconsistencies; where the test key is found to be inconsistent, the advising bank shall consult with the issuing bank for correction.
(c) Where the contents of a L/C or L/C modification form received by an advising bank are incomplete or unclear, the advising bank shall promptly consult with the issuing bank and require the same to provide necessary information. Prior to any reply from the issuing bank, the advising bank may notify the beneficiary of the L/C or L/C modification form received, on which it shall indicate that such a notice is for reference only, and that the advising bank shall not be held liable therefor.
(d) An advising bank shall deal with any L/C or L/C modification form within three (3)business days from the day following the date of receipt thereof.
Article 16 An issuing bank shall give a reply to an enquiry of an advising bank or provide necessary information requested thereby prior to the close of the business day following the date of receipt of the enquiry.
Article 17 Cancellation of a L/C 第十七条 信用证的注销
Where a L/C is within the term of validity, the L/C may be cancelled upon agreement between the parties concerned through consultation, and after the original L/C has been withdrawn by the issuing bank.
Where the beneficiary fails to submit documents within the term of validity of a L/C, the issuing bank may cancel the L/C one (1) month after the expiration thereof.
Upon the cancellation of a L/C, the issuing bank shall discharge the security provided by the applicant.
Chapter 3 Negotiation第三章 议付
Article 18 Negotiation shall refer to the activity wherein a negotiable bank designated by a L/C shall pay consideration to the beneficiary after deduction of the negotiation interest provided that relevant documents conform to the terms and conditions of the L/C.
Pure verification of documents without payment of consideration shall not constitute a negotiation.
Negotiation shall be limited only to deferred payment L/C.
Article 19 A negotiation bank shall be a deposit bank of the beneficiary as designated by the issuing bank. A bank that is not designated for negotiation or a designated negotiation bank that is not a deposit bank of the beneficiary may not conduct negotiation.
Article 20 A beneficiary may, before the document submission date of a negotiation L/C or within the term of validity of a L/C, submit to the negotiation bank the documents, the original L/C, the original of the L/C modification form, the advice of L/C, and advice of modification of L/C, and fill out a L/C negotiation/entrusted payment collection application and the proof of negotiation to request for negotiation. The negotiable bank shall examine and verify the documents set out in the L/C within five (5) business days from the day following the date of acceptance. Where the verification confirms the prima facie conformity of the documents to the terms and conditions of the L/C, the negotiable bank shall specify on the reverse side of the original L/C the date of negotiation, business serial number, increment, amount of negotiation, balance of the L/C and the name of the negotiable bank, and affix thereto the business seal.
The actual amount of negotiation shall be the amount of negotiation minus the interest accrued from the date of negotiation to the date immediately preceding the due date of payment by L/C. The rate of negotiation shall be calculated in light of the discount rate.
Article 21 Where a negotiable bank finds any inconsistencies between the documents submitted by the beneficiary and the terms and conditions of the L/C, the negotiation bank may contact the beneficiary to correct the inconsistencies so that the documents confirm to the terms and conditions of the L/C, and shall handle negotiation thereafter; where the inconsistencies still exist after the beneficiary has been contacted to make correction, the negotiable bank shall refuse to negotiate, and shall promptly give a written notice of refusal of negotiation stating the reasons thereof, and send the same to the beneficiary.
Article 22 As requested by a beneficiary, a negotiation bank may perform entrusted payment collection rather than negotiation for the beneficiary.
Article 23 Claim for reimbursement第二十三条 索偿
Upon negotiation, the negotiation bank shall send the documents to the issuing bank for reimbursement by means of entrusted payment collection. The amount claimed for reimbursement may not exceed the amount contained in the documents, unless otherwise specified in the L/C.
Article 24 Exercise of the right of recourse第二十四条 追索权的行使
After negotiation of a L/C, the negotiation bank shall be entitled to recourse against the beneficiary. Where payment is not received on the due date, the negotiation bank may recover the amount of negotiation from the account of the beneficiary.
Article 25 Upon negotiation, the negotiation bank shall collect negotiation processing fees and postal fees from the beneficiary in accordance with the provisions.
Chapter 4 Payment第四章 付款
Article 26 When submitting documents to an issuing bank for collection of payments on the document submission date or within the term of validity of a L/C, a beneficiary shall fill out the proof of entrusted payment collection and the L/C negotiation/entrusted payment collection application with the deposit bank thereof, and produce documents, the original of the L/C and the original of L/C modification form. Upon receipt of the proof and documents, the deposit bank shall promptly submit the documents to the issuing bank for collection of payment of the beneficiary where the received proof and documents are examined as complete.
Article 27 Within five (5) business days from the date following the date of receipt of the proof of entrusted payment collection, documents and the notice of document submission posted by the negotiation bank, or the proof of entrusted payment collection, the original L/C, the original L/C modification form, documents and the L/C negotiation/entrusted payment collection application posted by the deposit bank of the beneficiary, an issuing bank shall verify the prima facie conformity of the documents to the terms and conditions of the L/C. Where the same is found to be consistent, the issuing bank shall collect relevant funds from the account of the applicant as payment to the beneficiary for L/C of payment at sight, or send to the negotiation bank or the beneficiary a confirmation of payment at maturity, and collect relevant funds from the account of the applicant as payment to the negotiation bank or the beneficiary for deferred payment L/C.
Upon payment, an issuing bank shall specify on the reverse side of the original L/C the date of payment, business serial number, increment, amount of payment, balance of the L/C and name of the issuing bank, affix thereto the business seal, and deliver to the applicant the notice of coming documents of L/C with relevant documents.
Upon receipt of the notice of coming documents of L/C and documents delivered by the issuing bank, if the applicant finds any inconsistence between the documents, the said applicant shall resolve such inconsistence through consultation with the issuing bank and the beneficiary, or bring a lawsuit before a competent People's Court.
Article 28 Where an issuing bank finds any inconsistence between the documents upon verification, the said bank shall notify the submitter of the documents of all inconsistencies by telecommunication within five (5) business days from the day following the date of receipt thereof. The notification shall state that the documents are kept in custody on behalf thereof for further disposal. The issuing bank shall concurrently consult with the applicant, and where the applicant agrees to make payment, the issuing bank shall make payment forthwith; where the applicant refuses to make payment, the issuing bank shall return the documents to the negotiation bank, or return the original L/C, the original L/C Modification Form and documents to the beneficiary.
Article 29 Where the security deposit submitted by an applicant and the balance of the deposit account thereof are sufficient to satisfy the payment, the issuing bank shall still make payment within the time period as prescribed in Article 27 herein. The insufficient part shall be treated as a loan overdue. Where security such as mortgage, pledge or guarantee is provided by the applicant, reimbursement shall be claimed in accordance with relevant provisions of the Guaranty Law of the People's Republic of China.
Article 30 An issuing bank shall not be entitled to recourse against a negotiation bank or a beneficiary upon payment.
Chapter 5 Standards for Verification of Documents第五章 单据审核标准
Article 31 Upon the receipt of the documents, banks shall carefully verify all the documents as required by a L/C on the sole basis of the documents, so as to determine their prima facie conformity to the terms and conditions of the L/C. The banks may refuse to accept documents that fail to apparently conform to the terms and conditions of the L/C.
Where there are inconsistencies between and among the documents, the same shall be deemed as prima facie inconformity to the terms and conditions of a L/C.
Article 32 Banks shall not verify any documents not required by a L/C, and shall return the same, upon receipt thereof, to the submitter or pass on the same. Banks shall not be held liable for such documents. Where a L/C contains certain conditions while the documents required therefor are not specified, the condition shall be deemed as unspecified.
Article 33 Where a L/C requires several copies of documents, the documents submitted shall contain at least one (1) original. Unless otherwise provided for in the L/C, documents made by computer or carbon paper shall be accepted as original by banks, provided that such documents are marked as original.
Article 34 When any documents other than transport documents, insurance documents and commercial invoices are required by a L/C, the issuers and contents of such documents shall be expressly specified. In the event of failure to do so, banks may accept such documents as long as the contents of the same are not in conflict with other specified documents.
If a L/C contains any ambiguous expressions (e.g. "famous" and "top-ranking") used to describe the issuers of documents, as long as the documents submitted apparently conform to other terms and conditions of the L/C, the banks may accept the same.
Article 35 The date of issuance of any document may not be later than the term of validity of the L/C or the document submission date.
Article 36 Commercial invoices第三十六条 商业发票
(1) A commercial invoice shall be an invoice uniformly printed and made by state tax authorities with the applicant as the payer.
(2) Description of goods contained in an invoice shall conform to provisions of the L/C. Any other document may use general names of the goods, provided that such descriptions are not in conflict with those of the L/C.
(3) Invoice amounts may not exceed the amounts permitted by a L/C unless otherwise specified in the L/C.
Article 37 Transport documents第三十七条 运输单据
(1) Road, rail, inland waterway, air or marine transport documents
(a) Where a L/C requires road, rail, inland waterway, air or marine transport documents, as long as the types of the documents conform to the L/C, the banks may accept the same.
(b) The documents shall contain thereon the signature and seal of the carrier or the agent thereof.
(c) In the case of documents affixed with a receipt stamp, the date of seal shall be regarded as the date of shipment; in the absence of the receipt stamp, the date of issuance of the documents shall be taken as the date of shipment.
(d) A transport document shall indicate the place of shipment and the destination as specified in the L/C.
(e) Where a L/C prohibits transshipment, as long as the whole transport is included in one (1) transport document, banks may accept a transport document indicating transshipment or possible transshipment.
(f) Where road, rail, inland waterway or marine transport is concerned, banks shall take the submitted transport documents as a full set of originals, regardless of whether a transport document is marked as original or not; in the case of air transport, banks shall accept the original of the air transport documents issued to the consignor, regardless of the provisions in the L/C.
(2) Postal receipts
The surface of a postal receipt shall contain the seal of the shipper as set out in a L/C, and the date of seal or other date as indicated shall be deemed as the date of shipment.
(3) Where a L/C provides that only receipts of goods shall be submitted as transport documents, the date of issuance of such documents shall be regarded as the date of shipment.
Article 38 Insurance policies第三十八条 保险单据
(1) Insurance policies shall be signed and sealed and produced by relevant insurance companies or the agent thereof.
(2) Original insurance policies shall be submitted unless otherwise provided for by a L/C.
(3) Unless it is indicated on the insurance policies that insurance liabilities shall come into effect no later than the date of shipment, the date of issuance of such documents shall be no later than the date of shipment indicated in the transport documents.
(4) The insured amount under the insurance policies shall be not less than the amount of goods contained in the invoices, unless otherwise provided for in the L/C.
(5) A L/C shall specify the types of insurance required and the necessary additional insurance coverage. In the absence of such information, the insurance policy shall mean that the main risks are insured.
(6) Banks shall accept insurance policies with franchise constraints unless otherwise specified in a L/C.
Chapter 6 Exemption and Penalties第六章 免责与罚则
Article 39 Banks shall not be held liable for the formality, completeness, accuracy, authenticity or legal validity of any document.
The banks shall not be held liable for the status of goods stated in any document, or the goodwill or capacity of any parties concerned relating to the transport of goods.
Article 40 Banks shall not be held liable for any consequences arising out of or in connection with any delay or loss in the process of posting telegrams, letters or documents, or any error occurred in the process of telecommunication transmission.
Article 41 Banks shall not be held liable for any and all consequences arising out of or in connection with any business interruption due to an event of force majeure such as extraordinarily serious flood and earthquake. Upon resumption of business, the banks shall not negotiate L/Cs that have lapsed the document submission date or the term of validity during the interruption, unless upon special authorization by the issuing banks.
Article 42 Financial institutions that conduct L/C business in violation of these Measures shall assume the liabilities under L/Cs in accordance with these Measures. In addition, the People's Bank of China shall forfeit all processing fees received by the said institutions, impose thereon a fine of up to RMB 30,000 depending on the severity of the circumstances and pursue the liabilities of relevant persons subject to liabilities.
Any forgery or alteration of L/Cs, or forgery or alteration of any documents and papers attached thereto, or any fraudulent conducts by way of a forged L/C shall be subjected to legal liabilities in accordance with the Criminal Law of the People's Republic of China and the Decision of the Standing Committee of the National People's Congress on Punishing Crimes of Disrupting the Financial Order and other relevant laws.
Article 43 Any advising bank that fails to notify of any L/C within the time period under these Measures shall be subject to a fine of equivalent to ten (10) times the notification processing fees.
Article 44 An issuing bank that refuses to make or delays the payment of any document that meets the terms and conditions of the L/C without justifiable reasons shall pay to the negotiation bank or the beneficiary a daily damage at the rate of 0.5‰. of the amount under the document, and shall be subject to a daily fine at the rate of 0.7‰.of the amount under the document.
Chapter 7 Supplementary Provisions第七章 附则
Article 45 Formats and pages of the proof of L/Cs, L/C application form, L/C modification application form, L/C modification form, notice, negotiation application form and proof of negotiation and settlement shall be formulated uniformly by the People's Bank of China, and made by all commercial banks.
Article 46 Banks shall, when handling settlement business by L/C, charge the parties concerned postal fees in accordance with the standards of the administrations of posts and communications, and collect processing fees on the basis of the following standards:
issuance processing fee: at a rate of 0.15% of the opening amount under the L/C but not less than RMB 100;
modification processing fee: RMB 100 per application. In the case of increment modification, the increased part shall be charged in accordance with the standards on issuance processing fees, but shall be not less than RMB 100. No additional processing fees for modification shall be charged;
Notification processing fee: RMB 50 per application;
Processing fee for modification notification: RMB 50 per application;
Negotiation processing fees: at a rate of 0.1% of the amount under the document under negotiation.
Article 47 These Measures shall be subject to the interpretation and revision of the People's Bank of China.
Article 48 These Measures shall come into effect as of August 1, 1997.