PBOC Relaxes Rules on Yuan Qualified Domestic Institutional Investors Outbound Investment Scheme

PBOC Relaxes Rules on Yuan Qualified Domestic Institutional Investors Outbound Investment Scheme

Liao Shumin

Date: Thu, 05/03/2018 - 20:49 / source:Yicai
PBOC Relaxes Rules on Yuan Qualified Domestic Institutional Investors Outbound Investment Scheme
PBOC Relaxes Rules on Yuan Qualified Domestic Institutional Investors Outbound Investment Scheme

(Yicai Global) May 3 -- China's central bank today issued a new notice relaxing the regulation of overseas securities investment by the yuan (renminbi) qualified domestic institutional investors, or RQDII, in a move seen as further relaxation of capital controls in the world’s second-largest economy.

The People’s Bank of China said on its website that such investors can make overseas investments but are not allowed to convert the yuan to foreign currencies under  the RQDII scheme for outbound investment. It signals that China’s financial regulators resume the RQDII outbound investment scheme, which was unofficially suspended in 2015.

The yuan qualified domestic institutional investors making investment overseas refer to domestic financial institutions that have received approvals from China’s financial regulators to invest in yuan-denominated products in overseas markets using their own yuan funds or yuan funds raised from domestic institutions and individuals, excluding banks investing their own money abroad.

RQDIIs will have to report to the People's Bank of China, providing information about their profiles, custodian banks, funding sources and scale, investment plans, capital movement and overseas holdings, the central bank notice said.   

They shall also repatriate principal and returns on their overseas investment to their domestic yuan custody accounts in the form of the yuan via their overseas yuan custody accounts.

Editor: Mevlut Katik

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Keywords: RQDII, China Central Bank