Loanas & Advance (Credit)

8/6/2019 Loanas & Advance (Credit)

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LOANS & ADVANCE

(CREDIT)

NCC BANK

LOANS AND ADVANCES

One of the two primary functions of a commercial bank is to extend credit to the deficit

economic unit that comprises borrowers of all types. Bank credit is a catalyst of

economic development. Without adequate finance, there can be no growth in theeconomy. Bank lending is important for the economy in the sense that it can

simultaneously finance all of the sub-sectors of financial arena, which comprises

agricultural, commercial and industrial activities of a nation. Therefore, a bank issupposed to distribute its loan able fund among economic agent-in-deficit. in a manner

that it will generate sufficient income for it and at the same time benefit the borrower to

Overcome his/her deficit.

The word credit is derived from the Latin word credo meaning , I believe. In

general, credit means granting of a period of time by a creditor to a debtor at the

expiration of which the latter must pay the debt.

Moreover, it can be defined broadly or narrowly. Broadly speaking, credit is the finance

made available by one party (lender, seller, shareholder owner) to another (borrower,buyer' corporate or non-corporate firm). The former may be a pure lender (a financial

institution or a private money-lender), a seller supplying goods against the buyer, promise

of future payment, or a shareholder/ owner of a corporate/non-corporate making fundsavailable to the firm viewed as a separate entity. More specifically, the term credit is used

narrowly for only debt finance, To define in this way,- credit is simply the opposite of

debt. It is a stock-flow variable and should be carefully distinguished from money.Nowadays credit is provided by a wide variety of Sources.

This is the survival unit of the bank because until and unless the success of this

department is attained, the survival is a question to every bank. If this section does notproperly work the bank it may become bankrupt. This is important because this is the

earning unit of the bank. Banks are accepting deposits from the depositors in condition of

providing profit to them as well as safe keeping their interest. Now the question maygradually arise how the bank will provide profit to the clients and the simple answer is

Loans & Advance.

4.4.1 PROCESS OF LOAN


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The Bank offers a special credit service to the people to improve the quality of their

living standard. This sort of credit facilities help the government and private serviceholders to buy household and other appliances such as Television ,Refrigerator, car etc.

People who are not in service are also entitled to get this credit facility only if a guarantor

assures to pay off the full liabilities in case the client fails to repay the loan amount. Thecurrent rate of interst charged on Customer Credit Scheme is 15 % and the loan is

sanctioned for not more than three years. The products bought by this loan will have a

joint registration in the name of purchaser and the Bank.

5.2.1.2 House Building Loan:

House Building Loans are available to the clints who have the land but ubable to buildthe house on the land. The approval for this type of loan requires:

Valuation certificate of the Bank.

Estimated cost of building and DIT permission certificate.

5.2.1.3 Syndication / Project Loan:

The Bank finances large projects and constructions works of clints with outstanding

credit rating. After the signing ceremony of the ceremony of the loan, the Bank arrangesthe loan amount by borrowing from the other banks and disburses the loan amount to the

clients.

5.2.1.4 Industrial Loan:

Industrial Loans are approved for the improvement of the growth of both small andcottage and medium and large scale manufacturing industries. The rate at which this typeof credit facility is allowed depends on the size of the loan client status and the

performance of the industry for which the loan is being sanctioned.

5.2.1.5 Lease Financing:

This type of financing are usually provide the transportation sector. Now a day this

Lease Financing is one of the popular financing projects. The rate at which this type of

credit facility is allowed depends on the size of the loan, client status and the performanceof the industry for which the loan is being sanctioned.

5.2.1.6 Loan for Salaried Person:

Any Permanent salaried officer or employees aged between 20 to 50 years are usually

eligible for kind of loan. An eligible person can get one to five lac taka under this loanscheme. Repayable by monthly equal installments including interst within maximum 5

years.

5.2.1.7 House Repairing and Renovation Loan:


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Thegenuine residential owners can avail of this kind loan to repair, renovate their own

house, building, flats according to their need and repayment capacity. Any owner ofhouse aged 30 to 50 years will be eligible to get loan under this scheme. Repayment by

monthly equal installments including interst within maximum 5 years. Repayment will

start thr 4th

month pf availing of the loan.

5.2.1.8 Festival Loan:

This type of loan usually offers the shop owners who want capital for in the eve of any

festivals. The repay period is three month from when the loan sanction. This loan scheme

is newly introduced in National Credie and Commerce Bank Limited.

5.2.2 Continious Loan:

There are two Types of continuous loan

1. Secured Over Draft2. Cash Credit

5.2.2.1 Cash Credit (CC):

A cash credit it by which the customer is allowed to borrow money up to a certain limit'

This is a permanent arrangement and the customer need not draw the sanctioned amountat once, but draw the amount as and-when required. He can put back any surplus amount,

which he may find with him. Thus cash credit is an active and running account to-which

deposits and withdrawals affected frequently. Interest is charged only for the amountwithdrawn and not for the whole amount charged. cash credit arrangements are usually.

made. against pledge or hypothecation of goods. Sometimes this facility also provided

against personal security.If the customer does not use the cash credit limit to the full extent, the bank makes a

commitment charge' This charge^ is imposed on the unutilized portion of cash credit

only. cash credit provides an elastic form of borrowing since the limit fluctuatesaccording to the needs of the business. cash credit. are the most favorite mode of

borrowing by large commercial and industrial concerns in Bangladesh.

Between cc (Hypothecation) and cc (pledge) NCC sanction only cc (Hypothecation).

5.2.2.1.2 CC (Hypothecation):

cash credit is sometimes allowed against hypothecation of goods. The mortgage ofmovable property for securing loans called hypothecation. In a manufacturing company,

whose stocks of raw materials and manufactured goods constantly fluctuate, it is difficult

for the bank to control such changes , so hypothecation facilities are allowed. In the caseof CC (Hypo) the ownership and possession of the goods remain with the borrower. By

virtue of the hypothecation agreement the bank can take the possession of the goods

hypothecated , if the borrower-defaults bankers are in that case , entitled to take legal


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action against the debtor not only for the debt but also for breach of trust. The letter of

hypothecation creates an equitable and not a regal charge on the stocks.

(I) Project Loan: NCCBL shall allow Loans for longer duration to enable its investment

to be returned by way of repayment after detailed assessment and feasibility study as per

its guideline for entrepreneurs and investors willing to come to an arrangement in settingup industries and different production unit complying to rules and regulations of

governments Investment & industrial policy.

As investment shall be for longer duration and fraught with unforeseen risks, bank shall

obviously seek adequate eligible securities to cover itself. Acceptance of such securities

shall be as per laid down principles of the bank and Bangladesh Bank guidelines in this

regard.

(ii) House Building Loan:Bank shall allow credit facilities under such portfolio strictly as

per PPG within the Prudential Regulations of Bangladesh Bank for Consumer Financing.

(iii) Packing Credit: This facility also relates to financing at Pre shipment stage. NCCBL

shall consider such facility under defined guidelines against export of variouscommodities.

(iv) Loan against Imported Merchandise (LIM): Loan against the security of

merchandise imported through bank shall be allowed against Pledge of goods. Theprocedure and conditions for allowing such facility under prior arrangement or forced

circumstances shall be strictly as per related guideline of the bank. Due to inherent

complexities, the portfolio should be discouraged.(v) Loan Against Trust Receipt (LTR): Bank shall be selective in extending the facility

but shall prefer due to comfort in binding the customer legally. Generally such facility

shall be against arrangement and preferable against collateral security favoring the Bank.(vi) Transport Loan: NCCBL may extend Transport Loan on close scrutiny of the

purpose, Feasibility, experience of the borrower, credit/trust worthiness and above all

security aspect as per its guidelines in this regard.

(vii) Lease Finance: An entrepreneur, under this scheme may avail of lease facilities to

procure industrial machinery and equipments, Vehicles etc. (without having to purchase

it by down payment) with easy repayment schedule on case to case basis. Rate of interestunder this Scheme is 16% P.A.

(viii) Payment against Documents (PAD): This facility originates against payment of

Import Bills on lodgment of CLEAN shipping documents received from ForeignCorrespondent against Letter of Credit opened on behalf of the customers.

(viii) Festival Business Loan: The scheme designed to help the genuine businessmen tomeet the extra finance required during festivals like, Eids, Puja. Disbursement of this loan

is made in recycling order which is to be stopped 15 days before the festival day.

Maximum Tk.10.00 lac is allowable under this Scheme @ 16% interest P.A. at quarterly

rest. Application fee is Tk.500


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ix) Festival Personal Loan: The scheme formulated to meet emergency financial expenses

of the service holders at the time of festivals like Eids. Puja. Any salaried employee agedbetween 20- 50 years and working in Govt. Semi - Govt. Autonomous organization,

corporate bodies, Insurance Co., etc. are eligible to avail of this loan. The disbursement

of this loan starts before 1 month of festival and continues till festival. Borrower may beallowed to avail of maximum Tk. 15,000/- only for minimum 6 months but not more than

15 months @ 16% interest P. A. at quarterly rest. Application fee is Tk. 100/-.

(x) NCC Bank Housing Loan Scheme: In order to enable the service holders/ profess

ionals/ businessmen in purchasing Flat/House, Construction of Building and renovation,

the Bank launched Housing Loan Scheme from September 2004. The tenure of the loan

is maximum 12 years and maximum amount of loan is tk.50.00 lac with interest @ 16%

LENDINGLENDING AUTHORITY

As sure proper and orderly conduct of the business of the Bank, the Board of Directors'will empower the Managing Director and other Executives of the Bank to lend up certain

amount under certain terms and conditions at their discretion. The lending officer isbroadly categorized as follows:

Managing Director

Deputy Managing Director

Executive vice President Asst.

Senior vice President

Vice President

Senior Asst. vice President

Asst. Vice President.

It must be emphasized that an Officer will not be delegated lending authority only on the

basis of his position. Specified lending authority will be delegated by the ManagingDirector to various Executives after taking into consideration his proven credit judgment,

knowledge and experience. The amount of lending authority approved by the Board for

various Executives form the upper limits of the authority that may be delegated to an

officer holding corporate title. Each individual lending authority will be delegated to himin writing. The managing Director with the Executive Committee/ Board will review all

lending authorities periodically.

4.4.5 CIB4.4.5 CIB

Bangladesh Bank has established within itself a Credit Information Bureau (CIB), whichcollects credit information from the banks. Banks are required to furnish such

information in respect of credit limit of Tk.50000 and over. They mention the Name of

facility, security and charge along with outstanding balance. After consolidating such

information in respect of each customer the central bank supplies to the total limitssanctioned to and the number of banks dealing with a party. Thus the banks can find out


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if any of their customers is having excessive borrowings from the banking system at any

particular time.

4.4.6 LOAN CLASSIFICATION4.4.6 LOAN CLASSIFICATION

Loan classification is a process by which the risk or loss potential associated with theloan accounts of a bank on a particular date is identified and quantified to measure

accurately the level of reserves to be maintained by the bank to provide for the probable

loss on account those risky loan.

Like other banks, all types of loans of NCC BANK fall into following four scales:

Unclassified: Repayment is regular.

Substandard: Repayment is stopped or irregular but has reasonable

prospect of improvement.

Doubtful debt: Unlikely to be repaid but special collection efforts may

result in partial recovery.

Bad/ Loss: Very little chance of recovery.

4.4.7 SECURITIES

1. Primary security: These are the security taken by the ownership of the items for

which bank provides the facility.

2. Collateral security: Collateral securities refer to the securities deposited by thethird party to secure the advance for the borrower in narrow sense. In wider sense,

it denotes any type of security on which the bank has a personal right of action on

the debtor in respect of the advance.

4.4.8 DOCUMENTATION

Documentation can be described as the process or technique of obtaining the relevantdocuments. In spite of the fact that banker lends credit to a borrower after inquiring about

the character, capacity and capital of the borrower, he must obtain proper documents

executed from the borrower to protect him against willful defaults. Documents containthe precise terms of granting loans and they serve as important evidence in the law courts

if the circumstances so desire. Thats why all approval procedure and proper

documentation shall be completed prior to the disbursement of the facilities.

4.4.9 CREDIT DISBURSEMENT

Having completely and accurately prepare the necessary loan documents, the loan officerready to disburse the loan to the borrowers loan account. After disbursement, the loan

needs to be monitored to ensure whether the terms and conditions of the loan fulfilled by

both bank and client or not.


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4.4.10 ADMINSTRATION/MONITORING4.4.10 ADMINSTRATION/MONITORING

The administration of the loan process shall ensure. Compliance with all laws andregulations at both local and global levels including bank policy as set out in this

document and the Banks credit manual/ circulars.

Proper analysis of credit proposal is complex and requires a high level of numerical as

well as analytical ability and common sense to ensure effective understanding of the

concepts and thus common sense. Bank healthy proper staffing of the credit departmentsshall be done through placement of qualified officials who have got the right aptitude,

formal training in finance, credit risk analysis, Bank credit procedures as well its required

experience. Where repayment and interest servicing performance of a credit deteriorates

shall be identifies at an early state and closely monitored to avoid low losses.

BANK OF CHINA

Packing Loan

A special loan offered by the local bank to the exporter who has received qualified letterof credit, to be used under items of procurement, production and shipment, so as to

support the exporter to implement the contract, effect delivery as scheduled. Packing loan

is a pre-loading short-term financing, which enables the exporter to purchase, prepare the

material, produce and trade without difficulty even the self-owned capital is notsufficient.

Why to choose packing loan?

Expand trade opportunities In case the exporter is short of self-owned capital, and has

no way to procure the prepayment, the packing loan will help the exporter to developbusiness and grasp the trade opportunity successfully.

Reduce the occupied capital Free the exporter from using its self-owned capital at the

stages of goods preparation such as production, purchase and etc, relieve the pressure ofwork capital of the exporter.

When to choose packing loan?

The exporter is short of work capital, and the foreign importer agrees to open L/C

without acceptance of prepayment terms.

How to handle packing loan operation?

The Operation flow


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Attentions

1. When applying for packing loan, the exporter should submit to the bank: a. Writtenapplication; b. Foreign sales contract and domestic purchase contract; c. Introduction of

the trade ; c. Origin L/C.

2. The exporter should sign formal Loan Contract (Packing Loan) with the bank.

3. The financing bank should be the advising bank of the L/C and it can negotiate andpay.

4. soft clauses that the exporter has no way to fulfill shouldnt be included in the L/C.

5. After application of packing loan, the origin L/C should be retained in the financing

bank.

6. In normal cases, the received remittance should be deemed as first resource to repaythe packing loan .

7. Upon goods shipment and obtaining documents under L/C, the exporter should

present the documents to bank for negotiation as soon as possible.

ADVANTAGESAdvantages of Bank of China

Predominant credit BOC has a long history of over 90 years and has been awarded

the Best Bank in China by Euromoney for successively 8 times. With theprogressively improved system of corporate governance, overall integration of operation

flow, wholly-upgraded service efficiency and rich financial products, BOC has continued

to advance toward its goal of becoming a leading universal international bank;

Reform with keen determination Attentions have been paid to the intermediate

businesses, especially the strategy of developing various trade financing.

Ample capital A Chinese-invested bank with the strongest foreign exchange capital

power with a constantly increasing Renminbi capital power, sufficient capital to handle

this business for the clients.

Preferential price Provide the most beneficial financing plan as per the interest rate

on the market, help the clients lower the financial expense to the largest extent.

Accreditation support Earliest among domestic commercial banks to implement the

unified credit system, and has designed diversified credit extension method for tradingfinance.

Syndicated Loan


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Introduction

The syndicated loan is a financing method evolved from bilateral loan. Under thearrangement of syndicated loan, one bank or several banks (as the arrangers) organize

other banks to grant loans to the same borrower under one loan agreement according to

agreed terms.

Syndicated loans have the following features:

Huge amount, long term; fewer restriction on the use of proceeds (compared with

government loans and export credit); easier management (compared with loans borrowed

separately from different banks); less pressure on banks; diversified risk. As for the

borrower, syndicated loans provide large amounts of loans with longer term and easyoperation management (only need to contact with the agent bank).

Eligible Applicants

1.According to the national industrial policies and economic development plan of the

local government, syndicated loans are focused on energy, transportation, hi-techindustries and regional key projects.

2.Eligible applicants include corporations incorporated within China's territory or other

economic organizations approved by the banks (referred to as the borrower) that complywith General Rules on Loans and Interim Regulation on Syndicated Loans.

Application Materials

The requirement is the same as for either working capital loan or term loan.

Application Procedures:

1.The client manager of BOC pays attention to client's demand for financing.

2.The bank receives the client's loan information/bidding documents for financing.

3.The bank discusses the loan provisions and financing structure with the client, and draft

the related documents.

4.BOC is duly designated as the lead bank/underwriter for the syndicated loan.

5.BOC confirms the amount of credit.

6.The syndicate timetable, strategy and make-up are defined.

7.The loan memorandum and invitation to the syndicate are prepared, related financial

institutions are invited.


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8.The participating banks make commitment on their subscription.

9.The credit lines of the participating banks are finalized.

10. All parties reach consensus on the loan agreement and guarantee agreement.

11. The agreement is signed.

12. The agent bank is responsible for the routine work.

Credit to Real Estate Businesses

Introduction

Credit to Real Estate Businesses is a financial product applicable to businesses engaged

in real estate development and operation. The loan borrowers may include qualified real

estate developers or real estate operators that intend to buy newly built and/or stockresidence and office estate, and release the acquired property for a certain years.

All the Corporate Banking Department in BOC domestic branches may accept the

applications for such loans.

Business Assortment

In term operational modes, the credit to Real Estate Business are divided into two kinds.One is for the real estate development business and the other is for the real estate

operation. The credit to real estate business includes loans for residence development,

commercial property development and lands development. And the latter includes loansfor acquisition and operation of property.

In the latter case, a real estate developer or an operator borrows loans to develop or

operate certain projects and loans are repaid mainly with the proceeds from the projects.This category includes residence development loan, commercial property development

loan, and lands development loan and property acquisition and operation loan.

Eligible Applicants

Residence development loan is intended for real estate developers that develop residence

either for sale or rent, including affordable and functional housing, and commercialhousing for all market segments.

Applicant of commercial property development loan may be the real estate developer thatdevelops office buildings and retail outlets either for sale or rent.

Land development loan may be borrowed by institutions or corporations assigned by thegovernment to develop, manage or transfer undeveloped lands.


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Property acquisition and operation loan borrowed by corporations for purchasing

newlybuilt or stocked property for lease.

Application Qualifications

Applying for residence or commercial property development loans

1.The applicant should be a real estate developer that has been approved by the State RealEstate Administration and has registered with the Industrial and Commercial

Administration, obtained a Business License and passed the annual review and obtained

the certificate of qualifications issued by related authorities;

2.The developed residence projects of the applicant fit for his qualifications.

3.The applicant has obtained a valid loan card/certificate issued by the local office of the

People s Bank of China.

4.The use of the loans should comply with the national industrial policies and relatedlaws and regulations.

5.The applicant should have sound governance mechanisms, qualified management and

strict managerial control system.

6.The applicant should have sound operational, financial and credit conditions and

adequate solvency.

7.The applicant should secure loan guarantee in a way approved by BOC.

8.The applicant should open a basic account or ordinary deposit account in BOC, and

have deposit and settlement business in BOC.

9.The applicant has assigned a State-owned Land Use Right Remise or Assignment

Contract or a State-owned Land Use Right Transfer Contract, obtained the approval for

the land use and started construction within the timeframe set by the contract, and the

expiration of the contract may not be earlier than the expiration of the term of loan.

10. The applicant has completed the application procedures for the development and

obtained related documents (if applicable), including construction land planning permit,construction project planning permit, construction commencement permit, etc. All the

related documentation should be complete, authentic and valid.

11.The actual use of the project should be in consistence with its planned purpose, that

the project should have good market prospects.


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12.The construction budget and plan should comply with related regulations promulgated

by the national and local governments; the total budgeted investment has taken into

consideration inflation and other unforeseeable elements that may require additionalfinancing.

13.The self-contributed funds should account for at least 35% of the total budgetedinvestment and be used in the construction before the loans are available;

Applying for land development loans

1.The applicant is a legal entity of institution entrusted by the government.

2.The project should consist with the applicants qualifications and the local governmentshould approve the relocation of the original residents.

3.The applicant has obtained a valid loan card/certificate issued by the local office of the

Peoples Bank of China.

4.The use of the loans should comply with related national industrial policies andregulations.

5.The applicant should have sound governance mechanisms, qualified management and

strict managerial control.

6.The applicant should have sound operational, financial and credit conditions and has

adequate solvency.

7.The applicant should secure loan guarantee in a way approved by BOC.

8.The applicant should open basic account or ordinary account in BOC and have deposit

and settlement business with BOC.

9.The applicant has signed a contract of the State-owned Land Use Right Remise or

Assignment, or a State-owned Land Use Right Transfer Contract, and obtained the

approval for the land use and started construction within the timeframe set by the

contract. The expiration of the contract may not be earlier than the expiration of the termof loan.

10.The applicant has completed the application procedures for the development andobtained related documents (as local governments stipulated); the applicant should have

complete, authentic and valid documentation.

11.The land to be developed is well planned and has good prospects for transfer.

12.The construction budget and plan must comply with related regulations promulgated

by the national and local governments; the total budgeted investment has taken into


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consideration inflation and other unforeseeable elements that may require additional

financing.

13.The self-contributed funds must account for at least 35% of the total budgeted

investment and be used in the construction before the loans are available.

Project Financing

Introduction

Project financing refers to the practice that the sponsor (i.e. shareholder) of a project

which establishes a project company borrows loans in the name of the company, uses thecash flows and revenues of the company to repay the loans and leaves the assets of the

company as the guarantee. This financing mode is commonly applied to large-scale

infrastructure projects which generate steady cash flows, such as power generation, roads,

railways, airports, bridges, etc. The scope of application is expanding to some other areas

such as big petrol chemical projects.

There are two forms of project financing:

1.Project financing without recourse

Project financing without recourse is also referred to as pure project financing. In this

form of financing, repayment of the interest and principal of the loans solely depends on

performance of the project operation. At the same time, the lending bank acquiresproperty right of the project assets as collateral for the loan. If the project fails to be

completed or suffers operational losses, and if its assets or proceeds are inadequate to

repay all the loans, the lending bank will have no recourse to the sponsor of the project.

2.Project financing with limited recourse

In this form of financing, with operational revenue stream of the project as the source ofrepayment and property right as guarantee, the lending bank also requires a third party to

guarantee the loans. Thus the lending bank has recourse to the third party guarantor. But

the guarantor is only liable to the amount of guarantee. So it is referred to as projectfinancing with limited recourse.


1.The project has been approved by competent government authorities.

2.The feasibility study report of the project has been reviewed and approved by relatedgovernment authorities.

3.The introduction of foreign technology, equipment, patents and so on have beenapproved by the economic and foreign trade authorities.


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4.Project production has reliable source of raw materials and the material supply contract

or letter of intent is available.

5.The project company can provide guarantee on the completion of the project and

financial arrangement for over-expenditure of capital construction cost to the creditor,and agrees to transfer the insurance interests to the creditor ,and mortgages the

construction in progress or the already-built fixed assets as well as pledges the proceeds

made from the project to the creditor. The shareholders of the projects agree to pledgetheir equity rights to the creditor.

6.Products of the project has good marketing channel preferably with "take or pay"

purchases and sales contracts.

7.Products of the project are expected to have sound market prospects and good potential

of development and profitability.

8.The land use right of the project has been secured. Water supply, power supply,

communications and other support facilities are available.

Required Materials

1.Approval of the feasibility study report issued by related government authorities;

2.Approval of the environment authorities;

3.A foreign invested enterprise must provide the official written approval of the joint

venture contract and articles of association issued by the Ministry of Foreign Trade and

Economic Cooperation;

4.A copy of the business license;

5.The tax registration license?national tax and local tax??;

6.A copy of the institution reference code certificate of the People's Republic of China;

7.A copy of the foreign currency registration certificate (foreign-invested enterprise??;

8.Construction land planning permit, construction project planning permit, etc.;

9.Identity certificate of legal representative;

10. Loan card.

11. "take or pay" purchase and sale contracts, material supply contracts, completion

guarantee, plan for overspent costs, transfer of insurance interests, mortgage of


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construction in progress or already built fixed assets, pledge of the project's usufruct and

shareholders' equity right.

Application procedure

1.The project company submits an application for project financing to the CorporateBanking Department of any branches or head office of BOC.

2.The bank and the project company negotiate and reach agreements on the arrangementsof "take or pay " purchase and sale contracts, material supply contracts, completion

guaranty, arrangements for overspent costs, transfer of insurance interests, mortgege of

construction in progress or already built fixed assets, pledge of the project's usufruct and

shareholders' equity right, and other financing arrangements.

3.The bank reviews the application according to the credit approval procedure.

4.Upon approval, the project company negotiates on the text of financing contract withthe lending bank.

5.The agreement is executed and the loan is available for withdrawal.

Foreign Currency Loans

Introduction

The Foreign Currency loan of BOC is raised by the Bank on its own and granted to

enterprises. Currencies of the loans include US dollar, Euro, pound sterling, Japanese yenand Hong Kong dollar. Both the fixed rate and the floating one which is decided withreference to LIBOR plus comprehensive cost of the bank's financing and relevant profits,

are acceptable for the loans. To meet the customers' requirement, BOC can swap the

floating rate into fixed one. Compared with foreign government loans and Export Credit,foreign currency loans have diversified uses in equipment and material purchase, etc..

Business lines

Foreign currency loans of BOC meet the enterprises' need in working capital requirement

as well as fixed asset investment.,and vary the term of loan as short-term, medium-term

and long-term..

Eligible Applicants

Foreign currency loans of BOC are only extended to enterprises. Any legal entity with

account in BOC and the ability to repay can apply for foreign currency loans.



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1.The borrower should be an enterprise or institutional legal entity, or other economic

organization or an individual industrial and commercial household registered afterverification and ratification of the industrial and commercial administrative organs (or

competent authorities), and should bear a "Business License for the Enterprise Legal

Entity" issued by the industrial and commercial administrative departments;

2.The loans must be used for due and reasonable purposes and can bring economic

benefits;

3.The borrowers shall have relevant sources of foreign currency. If the borrowers have no

foreign exchange income, they shall be authorized bythe foreign exchange administrative

organto purchase foreign exchange for the repayment;

4.Conform to other BOC regulations on loans.

Required Materials

1.Application for loans;

2.A certificate of the legal representative and a letter of authorization, resolution of the

board of directors and the statute of the company;

3.Business license of the legal entity verified in the annual check (copy files accepted);

4.Audited financial statements of the borrowers for the last three years and recentfinancial statements;

5.Certificate of Loan;

6.Other documents and certificates required by BOC.

Application procedures

Borrowers should submitapplication to the Corporate Banking Department of BOC, with

required documents and materials ;

BOC examines and verifies the application materials and requires further supplementary

materials if necessary;

After the internal approval, BOC signs loan contract with the borrower;

Before the borrower can draw money according to the loan contract, it shall first fulfil

preconditions for the withdrawal and register with the foreign exchange administration.


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Fixed Asset Loan

Business summary

Fixed Asset Loan refers to loans granted by BOC to meet the demands of enterprises in

their investments in fixed assets. Investments by enterprises in fixed assets include capitalconstruction, technical innovation, developing and manufacturing of the new products as

well as related house purchase, civil engineering, purchase and installation of the

technical equipment, etc.

Business assortment

Fixed Asset Loan is divided into Long-term Loan, Temporary Circulating Loan and

Foreign Exchange Loan based on the following purposes.

Capital Construction: Which refers to infrastructure, municipal works, service facilities,

new or enlarged productive projects ratified and approved by the authorities concerned ofthe state.

Technical Innovation: Which refers to the technical innovation items aimed at the

expanded reproduction by the existing enterprises.

Scientific and Technological Development: Which refers to the activities concerning

research, manufacturing and development of the new technologies and products and with

regard to the transformation or application of the development results in the productionfield.

Other Purchases of the Fixed Assets: Which refers to the direct purchase of houses orfacilities not built by the enterprise itself for the use of production, storage and officialbusiness.

Applicant

The enterprise legal entities, institutional legal entities and other economic organizations

registered upon verification and ratification of the Industrial and CommercialAdministrative organs (or competent authorities) and involved in independent

accounting.

Qualifications for Application

1.The applicant must bear the Business License that has passed the annual examination of

the Industrial and Commercial Administrative Departments and the institutional legalentity must bear documents certifying its legal status.

2.The applicant should bear the Permit or Card for Loan verified and issued by thePeople's Bank of China.


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3.The applicant should have good economic effects, a good creditability, and a strong

capability to repay debt and a complete and excellent management system.

4.The applicant should fulfill guarantees acknowledged by BOC.

5.The applicant should open basic account or ordinary deposit account in BOC.

6.The fixed asset loan items should comply with the State industrial policies and creditpolicies.

7.The applicant must possess a proportion of capital stipulated by the state.

8.The project has been examined and approved by the governmental departments

concerned, with complete auxiliary conditions and ready sources of supply of equipment

and materials from abroad.

9.The applicant must bear import instrument or import registration documents in case of

applying for foreign exchange fixed asset loans.

Applying Procedures

1.The borrower should submit a written borrowing application to BOC.

2.The borrower should submit the required relevant documents to BOC, which including

the Business License, Company Regulations, financial annual reports for recent threeyears, documents for establishment of the project on file and documents of comment and

reply, analysis of the project economic benefits and plans for use and repayment of the

loans, etc.

3.BOC may make pre-loan investigations and evaluations, look into the credit level of the

borrower as well as into the legitimacy, safety and profitability in the borrowing, verifyand examine the pledges, properties and guarantors and form the views on evaluations.

4.Upon confirmation after inner-bank review and examination, both parties will agree

with the terms and conditions stipulated in the borrowing contract, the mortgage contractand the guarantee contract and all sides concerned would conclude the contracts.

5.The borrower will go through the relevant formalities such as the registration of thecontracted mortgage.

6.The borrower will present an application for drawing money.

7.The funds will be transferred into the borrower s bank account for use.


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Petty Consumer Credit(Loans)

Petty consumer credit loans of the Bank of China are consumer credit loans grantedby the lender to borrowers with good credit standing to facilitate normal

consumption, labor service and other fee payments.

Lending Conditions

A borrower (natural person) applying for petty consumer credit loans of the Bank ofChina must meet the following conditions:

1.Being a natural person aged 18-60 with full capacity of civil conduct;

2.Having city/town registered permanent residence or a valid residence permit;

3.Having a legitimate occupation and a stable income, and having the capacity ofrepaying the loan principal and interest accrued on schedule;

4.Having opened a demand account or Great Wall credit card account with the Bankof China;

5.The personal credit is evaluated and accepted by the lender. For a holder of theGreat Wall golden card of the Bank of China or a holder of the Great Wall ordinary

card for two years or more, separate evaluation of personal credit is unnecessary; and

6.Other conditions made by the lender.

Length of Maturity

The longest maturity of a petty consumer credit is one year.

Credit Limit

The maximum borrowing limit of a petty consumer credit is temporarily set at

RMB100,000.

Lending Rate

To the interest rate for petty consumer credit loans, the interest rate for loans of thesame grade set by the People's Bank of China applies. Upward fluctuation of the

interest rate shall not surpass the range provided for by the People's Bank of China.

Loan Application


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The application by the borrower to the lender for a loan, shall be supported by the

following materials:

1.An application for borrowing;

2.Valid credentials of the borrower (referring to an I.D. card, a residence booklet and

other valid residence certificates);

3.Testimonials of occupation and income (an employee's card and a pay sheet, or a

passbook for salary payment through an agency or other valid certificates);

4.For a Great Wall card holder, his credit card to be produced; and

5.Other documents or materials required by the lender.

Personal Loan Secured by CDs/Treasury Bonds

Personal loan pledged by certificates of deposit (CD) /treasury bonds is a kind of

business combining deposit and loan in which the client gets a certain amount of

Renminbi loan from the bank by pledging undue certificate(s) of time deposit andalso repays the principal and interest accrued on schedule. CDs used for

hypothecation are limited to certificates of time deposits issued by the savings outlets

in the local administrated area of the tier-one branches of and branches under theBank of China.

Prospective Borrowers

Any resident in China with full capacity for civil conduct, holder of undue certificates

of time deposit in local or foreign currencies issued by the Bank of China or treasure

bonds, may apply for a personal loan pledged by CDs/treasure bonds to the Bank. Aborrower applying for personal loan pledged by CDs/treasury bonds must also meet

the following conditions:

1.Being a natural person with full capacity of civil conduct;

2.Having local registered permanent residence or valid credentials;

3.Being a holder of undue certificate(s) of time deposit or treasure bonds issued by

the Bank of China;

4.Other conditions provided for by the lender.


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Length of Maturity

The length of maturity of a personal loan pledged by CDs/treasury bonds may not

exceed the due date of the pledged CD . Besides, the longest maturity shall be one

year. If multiple certificates of personal deposit are pledged, the length of maturityshall be set according to the nearest due date. For automatic renewal certificates of

deposit, the length of maturity shall be set according to the length of automatic

renewal.

Lending Rate

The interest rate for loans of the same grade announced by the People's Bank ofChina applies to the interest rate for personal loans pledged by CDs/treasury bonds.

The interest rate shall not float beyond the ceiling rate specified by the People's Bank

of China. If the length of maturity is less than six months, the interest rate shall be

that for the six month loan. For repayment before maturity date, the interest shall becalculated according to the originally set interest rate and the actual number of days

of borrowing. In case the People's Bank of China adjusts the interest rate, thecontracted interest rate is still adopted within the length of maturity.

Lending Purpose

Borrowers may use the loans for purchases of houses, cars and expensive consumer

durables, for house refurbishing, vacation and travel, education and other consumer

demands, as well as for working capital demand in normal operations.

Credit Limit

The minimum amount of a personal loan pledged by CDs/treasury bonds is

RMB1,000. The amount of the loan shall in principle not exceed 90% of the face

value of the pledged CD (for deposits in foreign currencies, calculated in Renminbitranslated at the current day buying rate of foreign exchange [bank note]). The

maximum borrowing limit of a single loan shall in principle not exceed

RMB3,000,000.

Loan Application

The application for a personal loan pledged by CDs/treasury bonds shall be supportedby the following materials:

1.An application for personal loan pledged by CDs/treasury bonds;

2.Presentation of valid original credentials of the borrower, pledgor(referring to I.D.

card, residence booklet and other valid residence certificates), and also provision of

their duplicates;


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3.Valid original certificate(s) of personal time deposit issued by the Bank of China;

4.Signature or password for the certificate(s) of deposit held by the borrower;

5.Other documents of certification or materials required by the lender.

Loan Repayment

The borrowers may use cash or deposits with the Bank of China for debt service.

With the consent of the lender, the borrowers may repay the principal and interest of

the loans ahead of schedule.

Consumer Durables Loans

Large consumer durables refer to Renminbi loans granted to individual consumers to

facilitate purchases of expensive consumer endurables. Expensive consumerendurables refer to household endurable commodities with a unit price of 3,000 yuan

or higher and a normal service life of more than two years, including household

electrical appliances, computers, furniture, body-building apparatus, sanitary tools,musical instruments, etc. (excluding cars and houses). Large consumer durables loans

may be used only for expensive consumer endurables operated by tied sellers that

have entered into related agreements with the lender and undertake installmentpayment business.


A borrower applying for large consumer durables loans must meet the following

requirements:

1.Being a natural person aged 18-60 with full capacity of civil conduct;

2.Having a legitimate job and stable economic income, and having the capacity of

repaying on schedule the loan principal and interest accrued;

3.Having assets approved by the lender for mortgage or pledge, or having an

individual or institution with adequate capacity for repayment by subrogation thatcommits itself to repay the loan principal and interest accrued and also hold joint and

several liability;


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4.The purpose for purchasing the commodity is for the borrower's, or his or her

family's use;

5.Having good credit, and also having the sincerity to make repayment by installment

or by lump sum; and also having opened a Great Wall credit card account or demand

deposit account with the Bank of China; and

6.Other requirements raised by the lender.

Length of Maturity

The length of maturity of large consumer durables loans is usually within one year,

with the longest up to three years (or shorten). For a borrower close to the age ofretirement, the length of maturity may not exceed the age of retirement (usually 55

for a woman and 60 for a man).

Interest Rate

The interest rate for large consumer durables loans shall be the rate for loans of thesame grade stipulated by the People's Bank of China, and the interest rate shall

fluctuate upwards in line with the regulations of the People's Bank of China. If the

length of maturity is within one year, interests shall be computed at the contracted

interest rate, and they shall remain unchanged in case of the adjustment of the legalinterest rate; if the term of one loan is over one year, in case of adjustment of the legal

interest rate, a new interest rate shall be adopted in accordance with the relevant grade

of interest rate as from the beginning of the following year.

Lending Currency

Renminbi.

Borrowing Limit

The credit lines for large consumer durables loans range from RMB2,000 to

RMB100,000. The down payment of a borrower in purchasing expensive consumer

goods shall not be less than 20% of the total value of the purchase, and the amount ofborrowing may not exceed 80% of the total value of the purchase.

Loan Guarantee

In applying for large consumer durables loans, the borrower must provide the lender

with an effective guarantee in the form of guarantee, mortgage or pledge.

1.If the borrower applies for the loan in the form of guarantee, a Guarantee Contract

shall be signed between the guarantor and the lender before the loan is granted, and

the guarantee of joint and several liability shall be made clear in the said guarantee.


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2.If the borrower applies for the loan in the form of mortgage, a Mortgage Contract

shall be signed between the mortgagor and the lender; if procedures of registration ofmortgaged property need to be handled according to laws and regulations, they shall

be completed before the loan is granted.

3.If the borrower applies for the loan in the form of pledge, a Pledge Contract shall be

signed between the pledgor and the lender; if the lender deems it necessary to handle

registration procedures for the pledged property, the procedures shall be completedbefore the loan is granted. If the borrower uses bonds or certificates of deposits to

create a pledge interest, procedures of pledged property registration are unnecessary.

Loan Application

The application by the borrower to the lender for a loan shall be supported by:

1.An application for borrowing;

2.Valid credentials of the borrower (referring to I.D. card, residence booklet and othervalid residence certificates);

3.Certificates of job and income (employee's card and pay sheet, or passbook for

payment on commission or other valid testimonial);

4.Purchase agreement, contract or certificate of payment;

5.Sheet of mortgaged or pledged property, certificate of ownership, certificate of

evaluation, written opinion of the guarantor agreeing to guarantee, and certificate of

credit status of the guarantor;

6.Other supporting documents or materials required by the lender.

Method of Repayment

1.The borrower shall open a current account with the Bank of China, and according to

the repayment plan provided in the contract, deposit money sufficient for the currentrepayment of the loan and the interest accrued in the current account prior to the day

of repayment and also authorize the lender to withhold the right of deduct -ing the

amount from the account on schedule.

2.Within the borrowing time limit, the borrower may, according to the methods of

repayment provided by the lender, repay the principal and interests of the loan byinstallment or by lump sum in full.

3.With the consent of the lender, the borrower may service the debt ahead of

schedule.


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Travel and Vacation Loans

Travel and vacation loans refer to loans granted to individual consumers to facilitate

their outlays for travel in and outside China organized by various kinds of travel

services (companies) approved by the lender.


Chinese citizens aged 18 and above and also with full civil conduct capacity. Besides,

such a borrower applying for a travel and vacation loan must meet the followingconditions:

1.Being a natural person with full civil conduct capacity;

2.Having local registered permanent residence or valid residence identification, andhaving a fixed and specific address;

3.Having assets approved by the lender for mortgage or pledge guarantee, or havingan individual or institution with adequate capacity for repayment by subrogation,

approved by the lender, that commits itself as guarantor to repay the loan principal

and interest accrued and also holds joint and several liability;

4.Must choose a credit-honored and high-rating travel company that is approved by

the lender;

5.Other requirements raised by the lender.

Length of Maturity

The length of maturity of travel and vacation loans is usually one year, with the

longest not exceeding three years.

Lending Rate

The interest rate for travel and vacation loans shall be the rate for such loans of thesame grade announced by the People's Bank of China. The interest rate shall not

fluctuate upward beyond the ceiling set by the People's Bank of China.

Lending Currency


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Renminbi.

Credit Limit

The minimum amount of initial payment for vacation and travel consumption of theborrower is 30%. The specific borrowing limit may be decided on in line with the

local consumption level and guarantee conditions, but in principle it may not exceed

70% of the total amount of the vacation and travel consumption. The maximumamount of such a loan may in principle not exceed RMB100,000.

Loan Guarantee

In applying for a travel and vacation loan, the borrower must provide the lender with

an effective guarantee in the form of guarantee, mortgage or pledge.

1.If applying for the loan in form of guarantee by a third party received by the lender,the borrower shall provide guarantee of joint and several liabilities. A Guarantee

Contract shall be signed between the guarantor and the lender. The guaranteeprovided under the Guarantee Contract refers to the performance guarantee on which

an insurance is taken out by the borrower through an insurance company.

2.If applying for the loan in the form of mortgage, the borrower or mortgagor mustconduct the procedures of mortgage registration, as agreed upon in the conduct and

purchase an insurance on mortgage property in the insurance company designated by

the lender, with the premium being not less than the sum of the principal and interestof the loan and the insurance expiry date not shorten than the maturity date of the

loan. The lender shall be the first beneficiary covered by this mortgage insurance. The

original of the policy must be in the custody of the lender.

3.If the borrower applies for the loan in the form of pledge, a Pledge Contract shall be

signed between the pledgor and the lender; if the lender deems it necessary to handleregistration procedures for the collateral security, the procedures shall be completed

before the loan is granted. If the borrower uses bonds or certificates of deposits to

create security right, registration procedures of collateral security are unnecessary.

4.Prior to the making of the loan, the borrower and the lender should go to the notary

office for handling the procedures of the relevant contract notarization, if the lender

deems it necessary.

Loan Application

In applying for a travel and vacation loan, the borrower shall file a written application

and also present the following materials to the lender:

1.An application for a travel and vacation consumption loan;


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2.Presentation of valid original credentials of the borrower (referring to I.D. card,

residence booklet and other valid residence certificates), and also provision of theirduplicates;

3.Detailed list of property used for mortgage or pledge, or letter of commitment by athird party that agrees to make a joint and several liability guarantee;

4.Relevant agreement signed with the travel company; and

5.Other supporting documents of certification or materials required by the lender.

Loans for Refurbishing Houses

Loans for refurbishing houses refer to Renminbi consumer loans granted by the

lender to borrowers to facilitate their own house refurbishing.


Chinese citizens aged 18 and above and also with full capacity for civil conduct.

Besides, such a borrower applying for a loan for refurbishing houses must meet the

following conditions:

1.Being a natural person with full capacity for civil conduct;

2.Having local registered permanent residence permit or valid residence permit, andhaving a fixed and specific address;

3.Having a legitimate occupation and stable reliable economic income, good creditstanding, and the capacity of debt service on schedule;

4.Having, in principle, the house refurbishing agreement or contract signed with the

refurbishing enterprise approved by the lender, and the statement of budget for therefurbishing project;

5.Providing property mortgage or pledge or third party guarantee approved by thelender. The guarantor shall be an individual or unit that is approved by the lender,

have the capacity of subrogation, and shoulder joint and several liability;


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6.Having a certificate of deposit that is not less than 30% of the total amount of the

house refurbishing with the bank designated by the lender, or a certificate proving

that the borrower has raised and paid over 30% of the house refurbishing amount;

7.Implementing other lending conditions provided by the lender.

Length of Maturity

The length of maturity of a loan for refurbishing houses is usually one to three years,with the longest not exceeding five years inclusive. The specific length of maturity

depends on the nature of the borrower.

Lending Rate

The corresponding lending rate stipulated by the People's Bank of China applies to

that on loans for refurbishing houses. If the length of maturity is within one year

inclusive, interest amount shall be computed in accordance with the contractedinterest rate, and the interest rate shall remain unchanged in case of adjustment of the

legal interest rate; if the term is over one year, the interest rate shall be subject tointerest rate adjustment, if any, made by the People's Bank of China.

Borrowing Limit

The ceiling of a loan for refurbishing houses shall not exceed 80% of the total house

refurbishing amount.

Loan Application

In applying for a loan for refurbishing houses, the borrower shall file a writtenapplication to the lender, fill in the related application form and also provide the

following documents, certificates and materials:

1.I.D. cards of the borrower and the spouse, residence booklet and other original valid

residence credentials;

2.Testimonials of fixed occupation and stable economic income approved by thelender;

3.For expensive luxury refurbishing, provision of the refurbishing agreement orcontract signed with the refurbishing enterprise approved by the lender and the

statement of budget for the refurbishing project is necessary in principle;

4.If property is used for mortgage or pledge, provision of a detailed list of the

mortgaged or pledged property by the way of security and the commitment or

statement agreeing to the mortgage or pledge duly signed by the person entitled to

disposal (including the co-owner of property) is necessary. For the mortgaged


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property as security, an evaluation report issued by the competent department and the

insurance document issued by the insurance company shall be provided, and for the

pledged property, a document of ownership certification shall be provided. If aguarantee is provided by a third party, a written document agreeing to guarantee by

the guarantor and the related credit certification materials shall be provided.

5.Certificate of deposit with the Bank of China that is not less than 20% of the total

refurbishing amount or a certificate of payment that over 20% of the sum total in

refurbishing project has been paid;

6.For expensive luxury refurbishing, provision of a business license (duplicate) and a

certificate of qualifications and credit records (duplicate) of the refurbishing

enterprise is necessary in principle;

7.Other documents or materials of certification required by the lender.

Educational Loans

Educational loans include commercial educational loans and state educational loanswith fiscal interest discounts. Commercial educational loans refer to consumer loans

granted by the lender to borrowers to finance the tuition and miscellaneous fees

(including the traveling expenses for going abroad) of the borrowers or the personsunder their legal guardianship in studying at domestic secondary schools or ordinaryhigher learning institutes or for master's or doctor's degree, or studying at universities

or for master's or doctor's degree outside the territory with approval. State educational

loans refer to educational loans granted by the lender to borrowers that are givenfiscal interest discounts by the central financial authorities or local financial sector,

and are used for the tuition and miscellaneous fees, lodging and living expenses of the

borrowers in studying at domestic higher learning institutes for full-timeundergraduate, professional or graduate courses.

State educational loans belong to credit loans and enjoy a 50% fiscal interest

discount, and their applicants must meet the condition that the involved schools haveaccess to state educational loans. Loans for studyingd abroad are currently limited to

commercial loans.

Commercial Educational Loans



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1.Natural persons with full capacity for civil conduct;

2.Having permanent residence or valid residence permit, and holder's own passport orborder pass if studying at a college abroad;

3.Having the enrollment notification or letter of offer from the school for study,student's identity card, and having the materials of certification on necessary tuition

and miscellaneous fees during the period of study provided by the school for study;

4.Providing asset mortgage or pledge that is accepted by the lender or a guarantee

provided by a third party guarantor that has the capacity of repayment by subrogation

and also holds joint and several liability;

5.The borrower already has a certain proportion of the money needed by the educated

persons.

Length of Maturity

The length of maturity of an educational loan is usually one to six years, with the

longest not exceeding ten years inclusive. The specific length of maturity depends on

the study conditions of the borrower and the nature of guarantee.

Lending Rate

The interest rate for loans of the same grade stipulated by the People's Bank of Chinaapplies to the lending rate for educational loans. If the length of maturity is one year

or shorter, interest shall be computed in accordance with the contracted interest rate,

and the contracted interest rate shall remain unchanged in case of adjustment of thelegal interest rate; if the length of maturity is over one year, in case of adjustment of

the legal interest rate, the interest rate shall be subject to the adjustment by the

People's Bank of China.

Lending Currency

Renminbi.

Borrowing Limit

The ceiling of an educational loan shall in principle not exceed 80% of the total

amount of tuition and miscellaneous fees.

Loan Guarantee

There are three loan guarantee modes, namely, mortgage, pledge and guarantee.


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1.If a loan is applied by mortgaging a house or other real estate, the rate of mortgage

is 70% of the evaluated value, but the loan may not exceed 80% of the total amount

of tuition and miscellaneous fees.

2.If a loan is applied by pledging certificates of deposit or registered treasury bonds,

the rate of pledge for certificates of deposit or registered treasury bonds is 90%, andfor certificates of deposit issued by other banks or other pledged security, the rate of

pledge depends on the value of the pledge security, but the loan may not exceed 80%

of the total amount of tuition and miscellaneous fees.

3.If a loan is applied in the mode of third party guarantee, the ceiling of borrowing

may not exceed 70% of the total amount of tuition and miscellaneous fees. But it may

be raised to 80% in case of joint and several liability guarantee provided by a bank oran insurance company.

Loan Application

In applying for an educational loan, the borrower shall file a written borrowing

application to the lender, fill in related application forms and also present thefollowing documents and certification materials:

1.I.D. cards of the borrower, the original of valid residence certificates, , or the

original of passport or pass of the educated person and its duplicate for file keeping incase of studying abroad;

2.Enrollment Notification of the school for study or student's identity card, andmaterials of certification drawn by the school for study on the total amount of tuition

and miscellaneous fees needed by the educated persons during the period of study;

3.If property is used for mortgage or pledge, necessary id provision of a detailed list

of the mortgaged or pledged property and the commitment or statement agreeing to

the mortgage or pledge by the person entitled to the disposal (including co-owner ofproperty) with his/her signature thereon. For mortgaged property, an evaluation report

issued by the competent department and the insurance document issued by the

insurance company shall be provided, and for pledged property, a document of

ownership or entitlement certification shall be provided. If a guarantee is provided bya third party, a written document of the guarantor agreeing to guarantee and the

related credit certification materials shall be provided;

State Educational Loans

Borrowing Conditions

1.Having full capacity for civil conduct (for a minor, a written letter of consent

provided by his or her legal guardian is necessary);


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2.Having a valid residence permit;

3.Reaching the study and conduct criteria required by the lender, without any act ofbad credit;

4.The school for study has signed a bank-school cooperation agreement with theBank of China;

5.With recommendation by an reference and also with a witness to provide a writtencertificate of his or her identity;

6.Agreeing that if the loan is overdue for one year and an extension is not approved,

the lender is to make public his or her name, the number of his or her I.D. card andthe act of default at the higher learning institute where he or she studies or on related

media.

Length of Maturity

The length of maturity of a state educational loan usually does not generally exceedeight years. If a student granted the loan further studies for a graduate or a second

bachelor's degree after the undergraduate course ends, the length of maturity during

the period of study is extended accordingly, and the principal and interest of the loan

shall be repaid up within four years after graduation from the graduate or the secondbachelor's degree.

Lending Rate

The interest rate for loans of the same grade stipulated by the People's Bank of China

applies to the lending rate for state educational loans.

Borrowing Limit

The amount of a state educational loan shall in principle not exceed RMB6000 per

person for one year.

Loan Application

In applying for a state educational loan, the borrower shall file a written borrowing

application to the lender, fill in related application forms and also present thefollowing documents, certificates and materials:

1.Original and duplicate valid personal certificates of residence permit and identity;

2.Enrollment Notification of the school for study and its duplicate, or student's

identity card and its duplicate;


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3.Certificate of tuition and miscellaneous fees and living expenses of the student

during the period of study drawn by the school for study;

4.Letter of recommendation and a certificate agreeing to the borrower's access to 50%

interest discount of state educational loan drawn by the school for study.

Auto Loans

Auto loans refer to Renminbi consumer loans granted to individuals or legal persons

to finance the purchases of cars.


Individuals: with full capacity for civil conduct; with stable occupation and capacity

of debt service, and good credit standing; able to provide valid property for mortgage

or pledge, or having individual or institutional guarantor with full repayment capacityby subrogation; able to afford the down payment for the car purchase.

Legal persons: with legal person status and loan repayment capacity; havingproceeds for the down payment for the car purchase that are not less than the

prescribed amount placed at the designated bank; having guarantee approved by the

lender, etc.

Length of Maturity

The longest period not exceeding five years.

Lending Currency

Limited to Renminbi for now.

Credit Limit

The down payment being 20% of the car price, the amount of borrowing may not

exceed 80% of the car price;

Lending Rate

It is adopted according to the corresponding lending rate announced by the People'sBank of China.


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Loan Application

Materials required in a car loan application:

For an individual: an application for borrowing; valid credentials; certificate ofoccupation and income, certificate of the debt service ability approved by the

creditor; car purchase contract or agreement signed with the designated dealers;

documents of certification required for guarantee.

For a legal person: an application for borrowing, legal person license, certificate of

legal person code, and documents of certification of the legal representative, financial

statements for the previous year and recent period, borrowing card or borrowingpermit granted by the People's Bank of China, car purchase contract or agreement

signed with the designated dealer; and all documents of certification required in the

guarantee.

Loan Repayment

Payment of equal amount of principal or of principal and interest by a monthly

installments, the borrower and the lender may choose a repayment pattern by

consultation. The borrower shall deposit prior to monthly repayment date provided

for in the loan contract sufficient monthly installment in its account so that the bankcan directly deduct the repayment of the loan principal and interest. With the consent

of the lender, the borrower is permitted to effect an early payment in part or in full.

Housing Loans

Housing loans of the Bank of China refer to loans granted by the bank to borrowers tofacilitate housing purchases. Housing loans are divided into housing loans on own

account, housing loans on authorization and combined loans.

Housing Loans on Own Account

Housing loans on own account refer to loans granted to individual housing buyers to

facilitate housing purchases that take credit funds of the bank as the source.


Natural persons with full capacity for civil conduct.


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Length of Maturity

Not more than 30 years for a Renminbi loan; not more than eight years for a foreign

exchange loan.

Lending Rate

The lending rate set by the People's Bank of China applies to the interest rate forhousing loans on own account. For housing loans in foreign currencies, the

corresponding lending rate announced by the Bank of China is adopted.

Lending Currency

Housing loans on own account are made in Renminbi and foreign currencies. The

prospective borrowers of loans in foreign currencies shall be overseas Chinese, Hong

Kong and Macao compatriots, employees of foreign-funded enterprises and otherswho have higher economic incomes, sources of repayment and reliable guarantee.

Borrowing Limit

The amount of a single loan shall exceed neither 80% of the evaluated value of the

house purchased, nor in the meantime the borrowing ceiling as provided by thelender.

Mode of Guarantee

The lender chooses the mode of guarantee for a housing loan according to the specific

conditions, which may include:

1.Pledging the property of the borrower or a third party (including legal person or

natural person);

2.Mortgaging the property of the borrower or a third party (including legal person or

natural person), including mortgaging the house purchased with this loan;

3.Guarantee by a third party with joint and several liability;

4.Combined guarantee. If the value of the mortgaged property and house or pledgedproperty provided by the borrower is inadequate to cover the amount of the loan,

guarantee by a third party with joint and several liability may be added to the

shortfall.

5.The borrower buys general credit insurance.

Loan Application


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The application for a housing loan shall be supported by the following materials:

1.Credentials (referring to I.D. card, residence booklet or other valid residence

certificate);

2.Testimonial to prove steady family income of the borrower;

3.Housing purchase contract, letter of intent, agreement or other document ofapproval that comply with the provisions;

4.A detailed list of mortgaged or pledged property, certificate of ownership (title deed

for a house or other titles), and the certificate certifying the consent to mortgage orpledge given by the person entitled to disposal.

5.An evaluation certificate for the mortgaged property issued by a competent

department;

6.A written document stating the consent given by the guarantor to the guarantee, anda credit standing certificate about the guarantor;

7.Other materials required by the lender.

Housing Loans on Authorization

Housing loans on authorization refer to loans to individuals who buy ordinary housesgranted by the bank on the authorization of the public reserve fund management

department, according to the prescribed requirements, and with the public reserve

deposits as the source of funds.


Natural persons who have full capacity for civil conduct and also are depositors of

housing reserve who deposit housing reserve funds at the funds management center or

retired veteran cadres, retired workers and staff members of collective deposit units.

Length of Maturity

Not more than 30 years.

Lending Rate

The interest rate for housing reserve loans set by the People's Bank of China applies

to the lending rate.

Lending Currency


38/38

Renminbi.

Borrowing Limit

The amount of a single loan shall not exceed 80% of the evaluated value of the houseto be purchased, and shall also not exceed RMB 390,000 yuan.

Mode of Guarantee

1.Mortgage plus general guarantee;

2.Mortgage plus all-risks insurance for housing purchase;

3.Pledge guarantee;

4.Guarantee with joint and several liability.

Loan Application

The application for a housing loan shall be supported by the following materials:

1.Valid credentials, residence booklet and marriage certificate;

2.Borrowing application that is filled in and sealed by the unit with which the

borrower works;

3.Housing purchase contract or letter of intent;

4.If involving the provision of guarantee, a letter of guarantee stating the consent

given by the guarantor to the guarantee;

5.Other materials the presentation of which are required by the handling person of the

funds management center.

Combined Housing Loans

A combined housing loan refers to a loan granted by the bank to the same borrower to

facilitate the purchase of an ordinary house for self use that takes the public reservedeposit and the credit fund as the sources. It is a combination of a housing loan on

authorization and a housing loan on own account from the bank.