In line with the integrated management approach for RMB and foreign currencies, the Measures unify and improve the policies on overseas lending by domestic non-financial enterprises in both RMB and foreign currencies, with the main contents set forth as follows:

• Increased lending quota with priority for RMB usage: The upper limit for the outstanding balance of overseas lending is raised to 0.6 times (previously 0.5 times) the lender's latest audited owner's equity. A lender's outstanding balance of overseas lending shall not exceed its upper limit. The outstanding balance of overseas lending = ∑ (RMB balance + foreign currency balance) + ∑ (foreign currency balance × currency conversion factor). For loans made in foreign currency, the currency conversion factor (currently 0.5) applies, meaning that foreign currency loans will consume more of the quota.
• Standardization of entity eligibility: The lender must have been registered for at least one year; both the lender and the borrower must have a sustained record of sound operations with no major violations of laws or regulations in the past three years; the two parties must have a direct or indirect equity holding relationship, or be directly or indirectly held by the same parent company; the scale of the overseas lending must be commensurate with the borrower's actual business operations; and the lender must have no outstanding non-compliant overdue amounts on its existing overseas lending.
• Strict requirements on the source of funds: The funds for overseas lending must be the lender's own funds (including its own RMB, its own foreign currency, and its own RMB funds converted into foreign currency through foreign exchange purchase). Personal funds or funds obtained through the lender's own debt financing shall not be used for overseas lending. Domestic foreign currency loans are no longer permitted as a source of funds for overseas lending.
• Strict requirements on use of funds: The use of funds must not exceed the permitted scope, circumvent regulatory requirements, or violate anti-money laundering rules. For example, funds must not be used to bypass ODI, QDII, or other policy requirements, nor be used directly or indirectly for purposes outside the borrower's business scope.
• Introduction of validity period, lending term, and extension limits: The validity period of overseas lending registration is two years. Any quota for which funds have not been remitted upon expiry of such period shall automatically become invalid. The term of overseas lending shall, in principle, be between six months and five years. For the same overseas lending, in principle, only one extension is permitted. If an extension is required, the lender shall submit an application to the local State Administration of Foreign Exchange (SAFE) at least 30 days prior to the expiry of the lending term.