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PBOC raises cap on net yuan inflow
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China鈥檚 central bank yesterday raised the ceiling on cross-border yuan fund flows for multinationals via two-way cross-border yuan cash pooling and cut the threshold to conduct the business.
The cap on the net inflow was raised to 50 percent of the total shareholders鈥 equity in the cash pool, according to a statement from the People鈥檚 Bank of China, the central bank. The initial ceiling for inflow was 10 percent and there was no limit on outflow.
The two-way cross-border yuan cash pooling allows multinationals to more conveniently allocate capital between group companies, enhancing cash-management efficiency and cutting financing costs.
China introduced cash pooling in the Shanghai free trade zone in 2013 and promoted it nationwide in 2014.
The PBOC also lowered some criteria for companies to participate in the yuan cash pool. Chinese and overseas group companies need to have been operational for one year, and their revenue requirements were lowered to 1 billion yuan (US$157 million) and 200 million yuan respectively.
In addition, multinationals can choose three banks to conduct the business for them, up from one bank under the previous rules.
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