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Term of Loans.
The
term of a loan shall be decided by the borrowing venture and the bank,
according to the specific contents of the items covered by the loan and
distinguishing among differing cases.
Interest
Rates on Loans. The interest rates on Renminbi loans shall be those
prescribed by the People's Bank of China. The interest rates on foreign
currency loans shall be set by the Bank of China and shall be put into
effect after being checked and approved by the People's Bank of China.
Application for Loans, Signing of Loan Agreements
and Utilization of Loans.
(1) A borrowing venture that applies for a loan must satisfy
the conditions for a loan and have the approval of its board of
directors; it shall go through the procedures for applying for a loan
from the bank, fill out and submit an application for utilization of the
loan and provide necessary documentation, materials and copies of
relevant contracts.
(2) After the loan application is examined and approved by the
bank, the borrowing venture shall sign a loan agreement with the bank,
open a loan account and complete borrowing procedures in accordance with
the provisions of the agreement. For a loan secured by credit, a letter
of guaranty of repayment of the loan, issued by a guarantor enterprise
and acceptable to the bank, shall be attached to the loan agreement; for
a loan secured by things, written confirmation that the collateral
serves as security for repayment, issued by the borrowing venture and
acceptable to the bank, shall be attached to the loan agreement.
Repayment of the Principal and Payment of
Interest on Loans.
(1) The borrowing venture must repay the bank on the dates and
in the amounts prescribed in the repayment schedule of the loan
agreement. If repayment of the loan becomes overdue, in the case of a
loan secured by credit the guarantor enterprise shall be responsible for
repayment of the entire amount due, and the bank shall have the right to
debit the deposit accounts of the borrowing venture and the guarantor
enterprise for repayment of the principal of the loan and payment of
interest thereon; in the case of a loan secured by things, the bank
shall have the right to sell the collateral of the borrowing venture in
order to repay the principal of the loan and pay interest thereon. With
respect to overdue loans, the bank shall, from the day on which the loan
becomes overdue, charge the borrowing venture additional interest of 20
to 50 per cent of the original interest rate.
(2) The borrowing venture mast pay interest in accordance with
the interest computation dates prescribed by the bank and , if it fails
to do so, the bank on its own initiative shall transfer the amount of
interest that is due into the loan account of the borrowing venture and
compute compound interest thereon.
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China in Brief
