To regulate the administration of clients' reserves of payment institutions, protect the legal rights and interests of the parties concerned, enhance the healthy and orderly development of the payment industry, and maintain financial and social stability, the People's Bank of China made the Measures for the Custody of Clients' Reserves of Payment Institutions, which are hereby issued for implementation.
The People's Bank of China
June 7, 2013
Measures for the Custody of Clients' Reserves of Payment Institutions
Chapter I General Provisions
Article 1 To regulate the administration of clients' reserves of payment institutions, protect the legal rights and interests of the parties concerned, and enhance the healthy and orderly development of the payment industry, these Measures are made pursuant to the Law of the People's Republic of China on the People's Bank of China, the Administrative Measures for the Payment Services Provided by Non-financial Institutions and other relevant provisions.
Article 2 These Measures shall apply to the deposit, gathering, use, transfer and other custodian activities of clients' reserves.
For the purpose of these Measures, the term “clients' reserves” means the pre-received and to-be-paid monetary funds actually received by payment institutions for payments entrusted by clients.
Article 3 Clients' reserves received by a payment institution must be deposited in the special-purpose deposit account for reserves as opened by the payment institution at a reserves bank.
For the purpose of these Measures, the term “reserves banks” means domestic banking financial institutions which have entered into an agreement with a payment institution to provide custodian services for clients' reserves, including reserves custodian banks and reserves cooperative banks.
For the purpose of these Measures, the term “special-purpose deposit accounts for reserves” means demand deposit accounts opened by payment institutions at reserves banks and exclusively used to deposit clients' reserves, including accounts for the custody of reserves, accounts for the receipt and payment of reserves, and accounts for the transfer of reserves.
Article 4 Clients' reserves may only be used for payments entrusted by clients and under the circumstances as set forth by these Measures.
Without approval, no entity or individual may appropriate clients' reserves for similar purposes or for other purposes, borrow clients' reserves, or use them to provide guarantee for others.
Article 5 Payment institutions and reserves banks shall, according to laws, regulations, these Measures and their agreements, provide custodian services for clients' reserves, guarantee the safety and integrity thereof, and protect the legal rights and interests of clients.
Payment institutions shall be cooperative when reserves banks exercise supervision over the deposit, use and transfer of clients' reserves pursuant to these Measures.
Article 6 The People's Bank of China (“PBC”) and the branch offices thereof shall carry out supervision and administration over the clients' reserves custodian activities of payment institutions and reserves banks.
Chapter II Management of Bank Accounts for Reserves
Article 7 The reserves bank of a payment institution shall satisfy the following conditions:
1. Its total assets are not less than 200 billion yuan, and it conforms to the regulatory provisions regarding risk control indicators such as capital adequacy ratio, leverage ratio and liquidity. If the payment institution has only opened an account for the transfer of reserves at the bank, the total assets of the bank may not be less than 100 billion yuan.
2. It has the capabilities and conditions for overseeing clients' reserves, including sound measures and rules for the custody of clients' reserves, technical capacity to monitor and check information about clients' reserves, and ability to establish a system for the custody of clients' reserves as required.
3. The number of its branch offices inside China and the distribution of its outlets can meet the payment institution's needs for operating the payment business, and it has the system processing capacity commensurate with the size of the payment business of the payment institution.
4. It has the capacity of disaster recovery and emergency response, and is able to maintain continuous business operations.
Article 8 A payment institution shall and may only select one reserves custodian bank, but may select reserves cooperative banks, if necessary, for its business operations.
For the purpose of these Measures, the term “reserves custodian bank” means a reserves bank that can provide inter-bank receipt and payment of clients' reserves for a payment institution, and is responsible for the gathering, verification and supervision of information about clients' reserves deposited by the payment institution at all reserves banks.
For the purpose of these Measures, the term “reserves cooperative bank” means a reserves bank that can receive clients' reserves for a payment institution and can pay with clients' reserves deposited therein, and is responsible for the supervision over clients' reserves deposited by the payment institution at the bank.
Article 9 A payment institution shall enter into a reserves agreement with its reserves bank or an authorized domestic branch office thereof, specifying the rights, obligations and responsibilities of both parties.
The reserves agreement shall specify a payment instruction for the payment institution to transfer clients' reserves from the reserves bank, the compensation liability that each party shall assume when any loss occurs to clients' reserves, and the mode of compensation.
If the reserves agreement has not clearly specified the responsibility for the security of clients' reserves, the payment institution and the reserves bank shall firstly guarantee the security of clients' reserves and the continuous operation of the payment business, and may not jeopardize the legal rights and interests of clients for any dispute between them.
Article 10 A payment institution and a reserves bank or any authorized branch office thereof shall, within five working days after entering into a reserves agreement, respectively go through recordation formalities with the PBC branch office at the locality of the payment institution.
Where any change occurs to the reserves agreement, they shall go through the formalities by reference with the preceding paragraph.
Article 11 A payment institution shall, at the reserves custodian bank, open at least one account for its own capital.
A payment institution's special-purpose deposit account for reserves shall be managed separately from its self-owned capital account, and may not be used for cash withdrawal.
Article 12 An account for the custody of reserves is a special-purpose deposit account which is opened by a payment institution with a reserves custodian bank and could be used to receive clients' reserves in cash and handle the collection and withdrawal of clients' reserves by bank transfer.
A payment institution may open only one account for the custody of reserves in one province (autonomous regions, municipality directly under the Central Government or city under separate state planning).
Article 13 An account for the payment and receipt of reserves is a special-purpose deposit account which is opened by a payment institution with a reserves cooperative bank and could be used to receive clients' reserves in cash and handle the collection and withdrawal of clients' reserves by internal bank transfer.
A payment institution may open only one account for the payment and receipt of reserves with one reserves cooperative bank or any authorized branch office thereof.
Article 14 An account for the transfer of reserves is a special-purpose deposit account which is opened by a payment institution with a reserves custodian bank and could be used to receive clients' reserves in cash or by internal bank transfer.
The reserves bank shall, before the end of each business day, transfer capital in the account for the transfer of reserves to the payment institution's account for the custody of reserves or its account for the payment and receipt of reserves opened with the same reserves cooperative bank in full amount.
The payment institution may, through the account for the transfer of reserves, directly return clients' reserves to the account from which such funds are transferred out.
Article 15 To open a special-purpose deposit account for reserves, a payment institution shall provide the certificates required for opening a basic deposit account, the account-opening registration certificate for a basic deposit account, the Payment Business License (duplicate) and a reserves agreement.
The name of a special-purpose deposit account for reserves shall contain the name of the payment institution concerned and the characters “clients' reserves.”
Article 16 On the basis of satisfying the needs for routine payment business operations, a payment institution may deposit clients' reserves in the form of corporate term deposit, corporate call deposit, agreement deposit or any other form approved by the PBC.
To deposit clients' reserves in a non-current deposit form as prescribed in the preceding paragraph, a payment institution shall transfer clients' reserves in its account for the custody of reserves or account for the payment and receipt of reserves to its bank account opened with the same bank. The said bank account shall be treated as a special-purpose account for reserves and shall be governed by these Measures.
Non-current deposits transferred from the account for the payment and receipt of reserves may not be deposited for more than 12 months. To convert non-current deposits into current deposits, the relevant funds shall be returned to the reserves account from which they are transferred out.
Article 17 The branch offices of a payment institution shall deposit clients' reserves which they have received into the bank account for reserves as opened in the payment institution's name, and may not open bank accounts for reserves in their own name.
Article 18 To close any of its special-purpose deposit accounts for reserves, a payment institution shall notify the reserves bank concerned or any authorized branch office thereof in writing, and go through the account closing formalities after transferring funds in the account to be closed to a replacing account in full amount.
If the account to be closed by the payment institution is an account for the custody of reserves, the account replacing it shall be an account for the custody of reserves opened by the payment institution with the reserves custodian bank or any authorized branch office thereof; if the account to be closed is an account for the payment and receipt of reserves, the account replacing it shall be an account for the custody of reserves; if the account to be closed is an account for the transfer of reserves, the account replacing it shall be the payment institution's account for the custody of reserves, or an account for the payment and receipt of reserves opened with the same reserves cooperative bank.
Article 19 To change its reserves custodian bank and close all its accounts for the custody of reserves, a payment institution shall report the cause of change, the schedule of change, the replacing reserves custodian bank, the replacing accounts and other relevant information to the local branch office of the PBC at least five working days beforehand.
The replaced reserves custodian bank shall, on the day when funds are transferred, close all accounts for the custody of reserves as opened by the payment institution with the bank.
Article 20 To terminate its payment business, a payment institution shall specify the matters about the closing of its bank accounts for reserves in the plan for protecting the legitimate rights and interests of clients as submitted under the Administrative Measures for Payment Services Provided by Non-financial Institutions, and go through the account-closing formalities according to the reply on closing.
Article 21 A payment institution and a reserves cooperative bank shall, on the day when a bank account for reserves is opened, modified or closed, respectively notify the reserves custodian bank or the authorized branch office thereof in writing.
A payment institution and a reserves bank shall, within five working days after a bank account for reserves is opened or within two working days after such an account is modified or closed, submit the relevant materials to the PBC branch office at the locality of the payment institution for recordation.
Article 22 Payment institutions and reserves banks shall properly keep the information about bank accounts for reserves and protect the security of the information and transactions of clients.
Chapter III Use and Transfer of Clients' Reserves
Article 23 Payment institutions shall handle the payment transactions entrusted by clients only after receiving clients' reserves or clients' irrevocable payment instructions on the transfer of clients' reserves. Before that, no payment institutions may handle the payment transactions entrusted by clients.
Article 24 Clients' reserves received by a payment institution via bank transfer shall be directly deposited in its special-purpose deposit account for reserves. Clients' reserves that could be received in cash shall be deposited in full amount in its special-purpose deposit account for reserves within two working days.
Article 25 The total end-of-day balance of clients' reserves deposited by a payment balance in its reserves custodian bank in each month may not be less than 50% of the total end-of-day balance of clients' reserves deposited in all bank accounts for reserves in the previous month.
Article 26 A payment institution may only handle the inter-bank payments entrusted by clients and adjust the positions of bank accounts for reserves opened at different reserves cooperative banks through its reserves custodian bank.
Clients' reserves deposited by a payment institutions in its reserves cooperative banks may not be transferred to any commercial bank other than its reserves custodian bank.
Article 27 Transfer of clients' reserves is prohibited between the reserves banks of different payment institutions.
Article 28 To redeem reserves for clients, a payment institution shall transfer capital through its special-purpose deposit account for reserves, and no cash may be employed in the process. If it is permitted by the relevant provisions that reserves could be redeemed in cash, a payment institution shall redeem the reserves through its self-owned capital account, and transfer clients' reserves from its account for the custody of reserves to its self-owned capital account.
Article 29 Payment institutions shall set aside risk reserves on a quarterly basis, deposit such reserves in their special-purpose deposit accounts for risk reserves as opened with a reserves custodian bank or an authorized branch office thereof, and use them to cover specific losses of clients' reserves or for other purposes as specified by the PBC.
Risk reserves shall be set aside at a certain proportion of the total amount of interest incurred under bank accounts for reserves. If the number of cooperative banks at which a payment institution opens accounts for the payment and receipt of reserves is not more than four, the proportion shall be 10%. When the number of cooperative banks a payment institution opens accounts for the payment and receipt of reserves increases, the proportion shall increase accordingly.
Measures for setting aside and managing risk reserves shall be made separately by the PBC.
Article 30 Payment institutions' income from commission charges for the payment business shall be transferred to their special-purpose deposit accounts for clients' reserves. Payment institutions shall carry forward such income to their self-owned capital accounts via their reserves custodian banks or the authorized branch offices thereof.
Article 31 Payment institutions may not use clients' reserves to pay for commission charges arising from the transfer of clients' reserves.
Article 32 A payment institution shall determine one of its self-owned capital accounts opened with its reserves custodian bank for handling the redemption of reserves for clients in cash and for depositing income from commission charges for the payment business, and one payment institution may only determine one self-owned capital account for the said purposes.
A payment institution and its reserves custodian bank shall, within five working days after determining a self-owned capital account for the above-mentioned purposes, respectively submit the relevant materials to the PBC branch office at the locality of the payment institution for recordation. To change the self-owned capital account, a payment institution shall report the cause of change, the replacing self-owned capital account, the time of change and other relevant matters to the local branch office of the PBC at least five working days beforehand.
Article 33 Payment institutions shall submit payment instructions to reserves banks according to their reserve agreements, and guarantee the veracity and compliance of the relevant capital transfers.
Reserves banks shall not transfer any capital until they have verified the payment instructions. If necessary, they may request payment institutions to submit the relevant certificates.
Reserves banks have the right to refuse to execute payment instructions sent by payment institutions in violation of their agreements.
Article 34 Payment institutions and reserves banks shall establish mechanisms for check of information about clients' reserves to check information about the deposit, use and transfer of clients' reserves on a daily basis, and keep the relevant check records.
Chapter IV Supervision and Administration
Article 35 The PBC and the branch offices thereof shall make off-site supervision and on-site inspection on the activities of payment institutions and reserves banks in the custody of the excess reserves of clients.
For regulatory purposes, the PBC and the branch offices thereof have the power to take the transaction records, accounting treatment records and files of payment institutions and reserves banks for consultation, and request payment institutions to make special-purpose external audit on the relevant items of their clients' reserves.
The PBC shall set up rules for the monitoring and check of statistics about the clients' reserves of payment institutions and organize the building of the relevant systems.
Article 36 The Payment & Clearing Association of China shall conduct self-disciplinary management over the activities relating to the custody of the clients' reserves of payment institutions.
Article 37 The PBC and the branch offices thereof shall oversee and regulate the average daily balance ratio between the paid-in monetary capital of payment institutions and their clients' reserves, the ratio of clients' reserves deposited at reserves custodian banks and the ratio for the provision of risk reserves according to the Administrative Measures for the Payment Services Provided by Non-financial Institutions and these Measures.
A payment institution which deposits capital other than clients' reserves in its bank account for reserves may apply to the local branch office of the PBC for deduction when calculating ratios mentioned in the preceding paragraph.
Article 38 If a payment institution and a reserves bank satisfy any of the following conditions, the payment institution may apply to the PBC for appropriately adjusting the ratios as mentioned in Article 37:
1. The payment business of the payment institution is subject to the real-time monitoring of the reserves bank;
2. The payment institution and the reserves bank are able to check clients' reserves transaction details one by one on a daily basis;
3. The payment institution is able to provide services for clients to inquire about their reserves through the reserves bank; or
4. The corporate governance of the payment institution is good, its risk management rules are sound, its safety measures for clients' reserves are effective, it is willing to voluntarily cooperate with the reserves bank in its supervision activities, and the reserves bank speaks highly of the compliance of its business operations.
Article 39 A reserves bank shall check accounts with a payment institution on a regular basis or from time to time. If discovering any abnormal situation about clients' reserves, the bank shall immediately urge the payment institution to make a correction, and immediately report such situation to the PBC branch office at the locality of the payment institution and the corporate body of the bank or any branch office authorized by the corporate body.
Article 40 If a reserves bank and a payment institution are not located in a same province (autonomous region, municipality directly under the Central Government or city under separate state planning), the reserves bank shall, when filing various information or data with the PBC branch office at the locality of the payment institution, send a copy to the PBC branch office at its own place.
Article 41 A reserves bank shall, within the first quarter of each year, submit a special-purpose report on the custody of clients' reserves of all payment institutions that have partnership with it in the previous year, and such report shall cover the deposit, gathering, use and year-end balance of reserves and the evaluation on the compliance of the business operations of the said payment institutions.
Article 42 Where any payment institution or reserves bank violates these Measures, the PBC and its branch office shall punish it under the Administrative Measures for the Payment Services Provided by Non-financial Institutions.
Chapter V Supplementary Provisions
Article 43 The power to interpret and revise these Measures remains with the PBC.
Article 44 These Measures come into force on the date of issuance.
