International Cash Pooling in China: to join the pool, follow the rules

by Bruno Francois, Head of Transaction Banking, Greater China, BNP Paribas

The RMB rules change fast and it requires hands-on expertise and thorough knowledge to tailor end-to-end RMB cash pooling solutions. Practically speaking, this is what corporates should be aware of today.

1/ Within the Shanghai Free Trade Zone

Corporates assigning an entity incorporated in the Shanghai Free Trade Zone (SFTZ) as their RMB pool header will get support from the People’s Bank of China (PBOC). Concretely, the PBOC facilitates the implementation of an international liquidity structure by:

• Not requiring pre-approval.
• Not applying any quota to overseas lending and borrowing funding, as long as the liquidity in the pool comes from daily operations and capital investment.
• On the other hand, funding from external financing, shareholder loans and bilateral entrusted loans are not allowed in the pool.

The simplified scheme ‘A 2-way process to optimise cross-border pooling in China’ focuses on the inter-company interest rate setting in the pooling structure.

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