China-based enterprises are no longer able to seek yuan-denominated loans from overseas banks through China’s central bank, according to sources familiar with the matter. Employees at Chinese banks revealed that they received a notice from the People's Bank of China in mid-July advising them that the central bank would no longer accept applications for direct offshore yuan borrowing from mainland companies. The interest rate of RMB loans from overseas banks can be much lower than the domestic benchmark interest rate, which has spurred a lot of enterprises to seek money outside the country. Analysts said that one of the purposes of the move is to prevent a flow of “hot money” from abroad. For more background, see this Reuters report.

Source
Shanghai Securities News

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