Supplementary Circular of the People's Bank of China and the China Banking Regulatory Commission Concerning Strengthening the Administration of Credit in Commercial Real Estate

Yin Fa [2007] No. 452

December 5, 2007

To the main office, the various branch offices, and the operations management office of the People's Bank of China in Shanghai; the central branch offices of People's Bank of China in the provincial (regional) capitals and the sub-provincial cities; the various banking regulatory bureaus; and the state-owned commercial and joint-stock commercial banks:

With the goal of further deepening implementation of the Circular of the People's Bank of China and the China Banking Regulatory Commission Concerning Strengthening the Administration of Credit in Commercial Real Estate (Yin Fa [2007] No. 359, hereinafter the Circular) and on the basis of national housing consumer policy and relevant regulations, this Supplementary Circular on issues related to part 3 of the Circular "Stringent Administration of Consumer Housing Loans" is hereby promulgated as follows:

I. The number of loans shall be determined based on the family (including the borrower, their spouse, and minor children) as the basic unit.

II. With regards to families which have already used a bank loan to purchase their first residence, where the average living area for each resident is less than the local average and the family applies to a commercial bank for a new housing loan, these cases may be handled with reference to the policy for first housing loans, however the borrower shall provide the results of a family housing area inquiry issued by the local real estate administration bureau based on the housing registration information system. The standard for the local average living area shall be the previous year's figure as announced by the census department. All others shall be handled as subsequent housing loans.

III. The case where families which have already made use of the housing allowance credit to purchase a residence apply again to a commercial bank for a housing loan shall be handled pursuant the previous paragraph.

IV. Commercial banks shall diligently perform their notification duties, requiring that borrowers act in good faith by submitting accurate documentation relevant to house ownership, income, residence status, taxation, etc.; No commercial banks shall accept credit applications that contain false information or false documentation, and no commercial bank shall accept further documentation from them from entities who have been discovered using fraudulent income documentation. Commercial banks shall report such entities and individuals to the bank industry association, with the bank industry association responsible for collecting and circulating the information; the regulatory department shall list it under key items for further investigation.

The various commercial banks shall, in the spirit of the Circular and this Supplementary Circular, formulate detailed rules for implementation, and file them with the People's Bank of China and the China Banking Regulatory Commission.

The main office, the various branch offices, and the operations management office of the People's Bank of China in Shanghai, the central branch offices of People's Bank of China in the provincial (regional) capitals and the sub-provincial cities; the various banking regulatory bureaus, and the state-owned commercial and joint-stock commercial banks shall forward this Supplementary Circular to the urban commercial banks, rural commercial banks, rural cooperative banks, urban/rural credit unions, and foreign-funded banks within their jurisdiction.