This Notice, drafted in accordance with laws, regulations, and policy documents including the Law of the People’s Republic of China on the People’s Bank of China, Law of the People’s Republic of China on Banking Regulation and Supervision, Law of the People’s Republic of China on Commercial Banks, Regulations on Ensuring Payments to Small and Medium-sized Enterprises, Opinions of the PBC, MIIT, MOJ, MOFCOM, SASAC, SAMR, CBIRC and SAFE on Promoting Regulated Development of Supply Chain Finance in Support of Stable Circulation, Optimization and Upgrading of Supply Chains and Industrial Chains (Yinfa No. 226 [2020]), and Guiding Opinions on Promoting the Healthy Development of Movable Property and Rights Financing Business (Yinbaojianfa No. 29 [2022]), is hereby issued to implement the guiding opinions of the Third Plenary Session of the 20th CPC Central Committee, the Central Economic Work Conference, and the Central Financial Work Conference; improve the financial services to the real economy; reduce the diversion of funds from and delayed payments to small and medium-sized enterprises (“SMEs”); optimize the financing environment of SMEs; strengthen the regulation of supply chain finance; and prevent and control the related risks.
I. Regulating Supply Chain Finance to Promote Mutually Beneficial Interactions of Upstream and Downstream Enterprises
1. Ensure an accurate understanding of the essence and direction of supply chain finance. In developing supply chain finance, we must fully and faithfully align with the new development philosophy on all fronts; internalize the political and people-centric nature of financial programs; and promote the new quality productive forces and contribute effectively to technology finance, green finance, inclusive finance, old-age finance, and digital finance with a view to serving the real economy, public welfare, and national initiatives. We will support the optimization and upgrade of industrial chains and supply chains, in particular the manufacturing and other key industries and areas, to enhance their resilience and competitiveness. We will strive to maintain a fair and orderly market to reduce overall financing costs across industrial chains and supply chains, so that both upstream and downstream companies stand to mutually beneficial development.
2. Encourage diversified supply chain finance models. We encourage commercial banks to build capacity, adopt more direct service approaches to reach supply chain enterprises, improve the quality and efficiency of accounts receivable financing services, and explore ways to reduce dependency on the core enterprises in supply chains by tapping into “data-based credit” and “property-based credit” to help supply chain enterprises—SMEs in particular—to obtain unsecured loans as well as financing secured by orders, inventories, warehouse receipts, and other movable assets or rights. Commercial banks are also encouraged to enhance their management systems for supply chain bill businesses, upgrade operational processes, and system functions to expand the applications of supply chain bills. We will help businesses to test, on an equal and voluntary basis, the limited-recourse service for supply chain bills through market-driven and law-based approaches. To broaden bill financing channels, we will guide financial institutions to orderly pilot the securitization of supply chain bills on condition that such activities are lawful and compliant and the risks are kept at a manageable level.
3. Ensure timely payments by core enterprises in the supply chain. Core enterprises in the supply chain should comply with the Regulations on Ensuring Payments to Small and Medium-sized Enterprises and other applicable laws and regulations by making payments to SMEs in a timely manner, protecting the legitimate rights and interests of SMEs, and assuming a reasonable share of the cost of supply chain financing. They are not allowed to abuse their dominant position to delay payment or unjustly add to the accounts receivable balance of SMEs, or impose unreasonable payment terms on SMEs, or compel SMEs to accept various non-cash payment methods or abuse such methods to the effect of extending payment deadlines.
4. Ensure supply chain information service providers are aligned with their market functions. Supply chain information service providers that operate and manage the relevant supply chain information service systems should aggregate and consolidate supply chain information, such as those related to tax invoices, funds, contracts, and logistics, on a lawful, voluntary, and fair basis and with integrity and self-discipline, and duly safeguard the legitimate rights and interests of all participants of supply chain finance. Supply chain information service providers should focus on information services and may not engage in payment settlement, financing guarantee, factoring, lending, or other financial services without a lawful license, or engage in cash pooling either directly or indirectly. They must prevent the transformation of information intermediaries into credit intermediaries. Any information intermediaries that provide business credit reports should complete the filing for commercial credit reporting companies as required by law. Illegal financial activities under the guise of supply chain finance are strictly prohibited.
II. Regulating Commercial Banks’ Supply Chain Finance and Holding Lenders Accountable to Their Management Responsibilities
5. Bolster credit risk management in supply chain finance. Commercial banks should establish comprehensive debt monitoring mechanisms covering loans, bonds, bills, and accounts payable of the core enterprises in supply chains, rigorously review their financing needs and use of funds, and strengthen the oversight of their conditions, including business operations, sales, inventory turnover, and payment for goods. Commercial banks should closely track the credit ratings, outstanding credit lines, and asset quality of such core enterprises, and strictly control the risk exposure to those with deteriorating financial positions, abnormal proportion of advance payments or accounts payable, or serious credit defaults. We will strictly prevent the core enterprises from obtaining duplicate lines of credit from multiple sources unjustifiably or excessive credit or abusing supply chain finance to worsen payment delays in relation to upstream and downstream enterprises. We will develop a credit risk prevention framework that covers the upstream and downstream enterprises within a supply chain that have obtained a line of credit.
6. Ensure lenders fulfill loan management responsibilities. While improving their accountability exemption system for loan decisions made with due diligence, commercial banks should rigorously fulfill their responsibilities in loan investigation, risk assessment, credit management, and loan monitoring; enhance the management of key risk management processes; and strengthen their control over loan risks. To prevent the “hollowing out” of loan oversight, they should not lower risk control standards due to business partnerships or outsource critical pre-loan, in-loan, and post-loan management stages. Key processes such as loan disbursement must be independently decided by commercial banks, with instructions initiated by the bank itself. For self-disbursement, funds shall be directly transferred to the borrower’s bank account. For entrusted payment, banks must fulfill their fiduciary duty by ensuring funds are ultimately paid to transaction counterparts that align with the borrower’s contractual usage purposes, preventing supply chain information service providers from intercepting, pooling, or misappropriating funds. Commercial banks must strictly comply with the credit reporting, payment, and anti-money laundering requirements established by financial administrative authorities.
7. Regulate cooperative programs on supply chain finance. In conducting marketing, customer acquisition, and information technology collaboration with supply chain information service providers, commercial banks should be fair, impartial, and transparent; enter into cooperation agreements in a timely manner and specify the rights and obligations of each party; and regularly evaluate the operations, management capabilities, and service quality of their partnering information service providers. Commercial banks should limit or refuse collaboration with supply chain information service providers that aggregate loan funds in violation of laws or regulations, impose unfair or unreasonable partnership terms, provide false customer materials or data, charge unreasonable service fees, or violate other laws or self-regulatory rules. Any supply chain information service systems developed and operated by commercial banks should be exclusive for their own use and not be offered as a service to external parties.
8. Strengthen information and data management in supply chain finance. In working with supply chain information service providers, commercial banks should strictly comply with laws, regulations, and regulatory rules including the Civil Code of the People’s Republic of China, Personal Information Protection Law of the People’s Republic of China, Regulation on the Administration of Credit Reporting Industry, and the Measures for the Administration of Credit Reporting Services (PBOC Order No. 4 [2021]). They should obtain accurate, complete information and data needed for identity verification, pre-loan investigation, risk assessment, and post-loan management, all on a lawful, justified, and as-needed basis; take effective measures to verify the authenticity of such information and data; and enhance the protection of borrowers’ information when using, processing, and storing those data. Commercial banks should regularly conduct information security assessment on their partnering supply chain information service providers, based on relevant self-regulatory evaluation results. Such assessment should include, but is not limited to, the following aspects: information protection compliance frameworks, oversight arrangements, information processing standards, and security safeguards, with the assessment costs borne by commercial banks.
III. Regulating Electronic Accounts Receivable Documentations, Improving the Management Framework, and Preventing Business Risks
9. In this Notice, “electronic accounts receivable documentation” refers to any electronic record issued by an accounts receivable debtor (such as a core enterprise in the supply chain) through a supply chain information service system to an accounts receivable creditor (such as an enterprise in the supply chain) in relation to bona fide trade transactions between them as a commitment to make the corresponding payments on time.
“Supply chain information service system” refers to any system built and operated by a commercial bank, a core enterprise in the supply chain, or a third-party company to provide information services and technical support for supply chain finance (including activities related to electronic accounts receivable documentations) or other supply chain management activities. “Supply chain information service provider” refers to any legal entity responsible for operating and managing a supply chain information service system and assuming the corresponding economic and legal responsibilities.
10. The issuance of electronic accounts receivable documentations and their assignment from one enterprise in the supply chain to another must be backed by bona fide transactions; issuance based on advance payments is prohibited. Supply chain information service providers should duly collect and aggregate transactional background documents. When providing financing services based on electronic accounts receivable documentations, commercial banks should scrutinize the transactional background documents to effectively identify and prevent misappropriation of bank funds through fabricated transactional background or funds transactions without bona fide transactional backgrounds. Commercial banks should also actively optimize the funding structure by prioritizing the financing needs of enterprises engaged in sci-tech innovations, advanced manufacturing, and green development as well as SMEs. Any use of such financing to create new, implicit local government debt is strictly prohibited.
11. The payment cycle of electronic accounts receivable documentations should not exceed six months in general or one year at the maximum. Where the payment cycle exceeds six months, the commercial bank should conduct enhanced review of the reasonableness of such billing period and of the settlement practices in the corresponding industry, and offer financing on a prudent basis.
12. Any supply chain information service provider that offers split-and-assign functions for electronic accounts receivable documentations should enhance self-discipline by implementing appropriate limits on the hierarchy of the assignor and assignee and the number of times of such assignments and promptly conducting risk reviews and issuing alerts for abnormal split-and-assign activities, in order to prevent the diffusion and spillover of credit risks from core enterprises in the supply chain. When providing financing for split electronic accounts receivable documentations, commercial banks are to strengthen transactional background review and may not provide financing for electronic accounts receivable documentations with opaque debtor-creditor relationship.
13. Financing based on electronic accounts receivable documentations should be registered by the relevant parties through the Unified Registration and Publicity System for Movable Property Financing operated by the Credit Reference Center of the People’s Bank of China; the registrants are liable for the truthfulness, completeness, and legality of the information they register. We encourage the standardization of such registrations for greater efficiency and for the robust and well-regulated development of supply chain finance.
14. Funds clearing and settlement for electronic accounts receivable documentations should be conducted through commercial banks or other qualified organizations. Supply chain information service providers may not use their own accounts as the funds settlement accounts for electronic accounts receivable documentations, nor divert or misappropriate the relevant funds.
When an electronic accounts receivable documentation becomes due for payment, the commercial bank or other clearing and settlement service providers should transfer funds based on the payment instruction or authorization from the issuer (core enterprise in the supply chain) of the electronic accounts receivable documentation, and should take necessary measures to verify the validity and integrity of such payment instruction or authorization. For any enterprise in the supply chain who holds a matured electronic accounts receivable documentation, the funds should be transferred to the account designated by such enterprise. For any enterprise in the supply chain that applies for factoring arrangements, the funds should be transferred to the account designated by the factor who holds the electronic accounts receivable documentation. For any enterprise in the supply chain that applies for pledge-based financing, the funds should be separately transferred to the accounts designated by the enterprise and the pledgee in accordance with their agreement.
15. Where an accounts receivable debtor such as a core enterprise in the supply chain fails to make payments on electronic accounts receivable documentations at maturity as agreed, or has yet to meet its debt obligations following default on a bond issue or a long overdue acceptances, supply chain information service providers should promptly cease providing electronic accounts receivable documentation issuance services to such debtor.
16. No core enterprise in the supply chain may abuse their dominant position to coerce other enterprises in the supply chain and specific borrowers to obtain financing at rates above reasonable market levels, nor collect fees from other enterprises in the supply chain, receive kickbacks, or otherwise injure the lawful rights and interests of those enterprises in the name of accounts receivable verification. When providing services related to electronic accounts receivable documentations, supply chain information service providers should establish reasonable fee rates, specify the payer of those fees, and either publish the fee rates or set them in an agreement with the relevant parties. Fees for supply chain information services should be strictly separated from the interest of bank financing.
17. Supply chain information service providers should ensure their supply chain information service systems are secure, reliable, and stable; protect user privacy and data; maintain accurate and complete records and properly retain relevant information; support the secure and stable transactions of electronic accounts receivable documentations; and submit such data as required for self-regulation and statistical tracking to industry self-regulatory organizations and the Shanghai Commercial Paper Exchange in a timely manner.
18. The People’s Bank of China and other relevant authorities will advise self-regulatory organizations in the supply chain finance industry to exercise self-regulation of supply chain information service providers and electronic accounts receivable documentation transactions, developing self-regulatory rules, organizing and carrying out self-regulatory filings and risk monitoring, supervising various participants to operate in a compliant and prudent manner, and strengthening the security and compliance assessments of supply chain information services. Supply chain information service providers, commercial banks, core enterprises in the supply chain, and other participants of supply chain finance may voluntarily join such self-regulatory organizations.
19. The People’s Bank of China and other relevant authorities will advise the Shanghai Commercial Paper Exchange to organize information aggregation, conducting statistical monitoring and analysis, providing information access services, and ensuring data interoperability and information sharing with industry self-regulatory organizations in relation to electronic accounts receivable documentations. Supply chain information service providers and commercial banks that provide financing or funds clearing and settlement services for electronic accounts receivable documentations should duly perform their information reporting obligations and be liable for the truthfulness, accuracy, and completeness of the information they report.
20. The People’s Bank of China and the National Financial Regulatory Administration will supervise supply chain finance in accordance with this Notice and their respective statutory mandates, and will strengthen policy coordination and information sharing with the Supreme People’s Court, National Development and Reform Commission, Ministry of Commerce, State-owned Assets Supervision and Administration Commission of the State Council, and State Administration for Market Regulation, to jointly enhance policy guidance for the participants of the electronic accounts receivable documentation market. Local financial authorities are to supervise, in accordance with the guidelines of this Notice and their respective responsibilities, the business activities of commercial factoring companies and other local financial institutions in relation to electronic accounts receivable documentations.
21. This Notice takes effect on June 15, 2025.
The provisions concerning electronic accounts receivable documentations have a two-year transition period from the effective date of this Notice. All participants are to re-align their business with this Notice during the transition period and, upon its expiration, strengthen the regulation of such business in strict accordance with this Notice. Industry self-regulatory organizations and financial infrastructures are required to duly implement the relevant requirements. The provisions of this Notice apply similarly to the relevant activities of financial institutions including the China Development Bank, policy banks, rural cooperative banks, rural credit cooperatives, foreign-funded banks, finance companies of corporate groups, and commercial factoring companies and to local financial organizations.
People’s Bank of China
National Financial Regulatory Administration
Supreme People’s Court
National Development and Reform Commission
Ministry of Commerce
State Administration for Market Regulation
April 26, 2025
