Article 1 The Measures are formulated inaccordance with relevant state statutes for the purpose of supporting theconstruction of low-rent housing and safeguarding the legitimate rights andinterests of borrowers and lenders.
Article 2Low-rent housing construction loans in the Measures refer to loans usedfor construction or renovation of low-rent housing.
Article 3 Lenders in the Measures refer tobanking financial institutions that are incorporated within the territory ofthe People’s Republic of China in accordance with its law and approved by theChina Banking Regulatory Commission and its dispatched agencies.
Borrowers in the Measures refer toeligible real estate development companies established pursuant to the law andengaged in the construction of low-rent housing.
Article 4An application for low-rent construction loans must meet the followingconditions:
1. The low-rent housing project is included in thegovernment’s annual plan for low-rent housing construction, and has beenapproved by competent government agencies.
2. An agreement on repurchase of the low-renthousing has been signed with the government.
3. A dedicated savings account shall be opened withthe lending bank.
4. A valid collateral acceptable to the lendershall be provided.
5. Should the low-rent housing project be newconstruction, Certificate for the Use of State-owned Land, Planning Permiton Land for Construction Use, Planning Permit on Construction Works and WorkingPermit on Construction Works are required. Should the project be renovationof low-rent housing, it should have been approved by competent governmentagencies.
6. The share of registered capital of the projectshould not be lower than 20% of the total investment if the project is newconstruction of low-rent housing, and should not be lower than 30% if theproject is of renovation nature.
7. The borrower has good credit standing withoutrecords of default.
8. Other conditions that may be decided by thelender.
Article 5The lender shall reinforce pre-lending examination by investigating into andevaluating the borrower and the construction project in question. The borrowershall provide relevant documents to the lender upon the latter’s request.
Article 6 Theamount of the loan shall not exceed the repurchase price agreed in therepurchase contract.
Article 7 Theterm of the low-rent housing construction loan shall not exceed five years andsubject to consultations between the borrower and the lender.
Article 8The interest rate of the low-rent housing construction loan shall be 10% lowerthan the benchmark interest rate of loans with the same maturity and of thesame category announced by the People’s Bank of China.
Article 9 Inprinciple, low-rent housing construction loans for one project shall beconducted by one bank alone. As for large-scale projects, syndicated bank loansare permitted.
Article 10The lender shall manage the low-rent housing construction loan separately, setup an ad hoc accounting item for bookkeeping and separate accounting.
Article 11The low-rent housing construction loan shall be managed in a close-endedmanner, and funds shall be delivered according to work progress after theregistered capital is paid in. The lender shall perform effective monitoringand management over fund that flows into and out of the dedicated savingsaccount. A separate ledger should be created to record detailed informationsuch as the time, debit or credit, use, recipient, amount and the receiver ofeach loan. The lender and the borrower shall sign a separate and close-endedagreement.
Article 12 The lender should supervise the borroweron loan using and ensure the following principles are observed:
1. The borrower shall usethe loan for its specified purpose and shall not divert the loan for otherpurposes;
2. The borrower shall usethe loan only after the registered capital of the project has is fully engaged;
3. The borrower shall usethe loan according to the progress of construction.
Article 13 The lender should review the using ofevery loan and the borrower should report loan using, construction progress oflow-rent housing and the accounting status on a regular basis.
Article 14 Low-rent housing loans should be guaranteeloans. Where the borrower cannot provide full-value collateral (pledge), athird party acknowledged by the lender should provide guarantee and be heldjointly liable.
Article 15 In case of the borrower’s breach ofcontract, the lender may adopt the following measures:
Where the borrowerdiverted the loan for other purposes, the lender is entitled to cease the loanand reclaim the extended part of the loan;
Where the borrowerfailed to use the loan or repay the principal or the interests as accorded inthe contract, the lender is entitled to claim penalty interest as accorded inthe contract;
On the basis ofmutual agreement, where the borrower can deliver full repayment in advance, thelender may not claim the penalty for breach of contract.
Article 16 The banking financial institutionsextending loans for the construction of low-rent housing should formulatedetailed operational rules according to the Measures.
Article 17 The PBC and the CBRC are responsible forthe interpretation of the Measures. The PBC will disclose information onthe quality of low-rent housing loan in various cities and regions with otheragencies concerned.
Article 18 The Measures shall be implemented30 days after its promulgation.
