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China central bank moves to regulate third-party payment business

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BEIJING, Nov. 4 (Xinhua) -- The People's Bank of China (PBOC) on Friday unveiled methods outlining how the central bank plans to regulate non-financial organizations engaged in payment and settlement businesses.

As China's online shopping industry booms, PBOC has been drafting the proposed regulations to ensure healthy development of third-party payment and settlements.

The central bank will seek public feedback on the proposed regulations till Nov. 12 before implementing them.

China had 485 million Internet users by the end of June, among whom some 150 million were active online shoppers, according to China Internet Networks Information Center.

According to the proposed regulations, each payment institution can choose only one commercial bank for the custody of provisions paid by clients for goods or service to sellers.

To be a custodian bank, a commercial bank must either first acquire the custody license of securities investment funds, or have assets of more than 200 billion yuan (31.7 billion U.S. dollars) while meeting the supervisory requirements on capital adequacy ratio, leverage rate and liquidity.

Payment institutions must manage clients' provisions and their own capital under separate accounts, according to the proposed methods.

Meantime, custody banks must deposit customers's provisions in full amount and use only in the payment of business authorized by customers.

Custody banks can keep customers' provisions for payment for no longer than three months if they store it under accounts other than demand deposits, according to the PBOC.

China's online business-to-consumer and business-to-business transactions reached 4.5 trillion yuan last year, of which more than 1.1 trillion yuan was settled through a third-party payment institution, according to the Ministry of Commerce.

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