China tightens rules on non-financial firms investing in financial institutions

BEIJING (Reuters) – China’s central bank and financial regulators have issued guidelines to strengthen supervision on non-financial companies investing in financial institutions.

China will strictly restrict irrational and blind investment in financial institutions, according to the guidelines issued by the People’s Bank of China and the country’s banking, insurance and securities regulators.

State-owned firms must report their investment in financial institutions to the Communist Party Central Committee and State Council, the guidelines stated.

Non-financial firms cannot borrow funds to invest in financial institutions and controlling shareholders of financial institution must meet certain requirements on profits and asset ratio, the guidelines stated.

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