HONG KONG, May 2 (Xinhua) -- RMB business in Hong Kong started in 2004 and its scope has been expanded since then. Prior to the introduction of the RMB trade settlement business in July 2009, banks in Hong Kong participating in the RMB business scheme offered a range of retail banking services and the subscription and trading of RMB bonds.
Since July 2009, Hong Kong participating banks can provide a wider range of RMB services, including trade finance. Below is major review of RMB services in Hong Kong:
Deposit-taking
Hong Kong residents, and those belonging to the seven categories of retail sales, catering, accommodation, transportation, communications, medical and educational services, as well as trade enterprises (from July 2009), can open RMB deposit accounts with Hong Kong participating banks.
Up to the end of March, RMB deposits in Hong Kong totaled 451.4 billion yuan (69.4 billion U.S. dollars).
Currency exchange
Individuals can exchange RMB for Hong Kong dollars or vice versa, up to the equivalent of 20,000 yuan per person per transaction, if the exchange is made in cash, and up to 20,000 yuan per person per day, if the exchange is made through a deposit account.
Designated merchants can exchange RMB cash obtained from their normal course of business for Hong Kong dollars (one-way) without limit. For RMB bond issuers on the mainland, conversion of RMB to Hong Kong dollars can be conducted for the settlement of expenses incurred in bond issuance.
Starting from July 2009, trade enterprises can exchange Hong Kong dollars for RMB or vice versa, based on actual trade transactions.
Remittance
Hong Kong residents can remit RMB to their own accounts with their mainland banks, subject to a daily limit of 80,000 yuan per account. Apart from individuals, issuers of RMB bonds in Hong Kong can remit proceeds from bond issuances to the mainland.
Starting from July 2009, two-way remittances can be conducted between enterprises on the mainland and those outside the mainland, based on actual trade transactions.
Fund transfer services within Hong Kong are also available, but such transfers are confined to those between the "same-name" accounts of the same enterprise held at different banks for pooling RMB funds to make payments in relation to trade settlement.
Trade finance
With the launch of the RMB trade settlement pilot scheme in July 2009, Hong Kong participating banks can provide trade finance to enterprises outside the mainland that choose to settle their trade with mainland enterprises in RMB.
Such trade finance should be limited to the amount of a corresponding trade transaction and be paid directly to mainland enterprises.
Credit and debit cards
Hong Kong participating banks can issue RMB debit and credit cards to Hong Kong residents for use on the mainland. RMB debit and credit cards issued by mainland banks are also accepted by retailers in Hong Kong.
Cheques
RMB cheques drawn on current accounts held with Hong Kong participating banks can be used both in Hong Kong and on the mainland. Within Hong Kong, customers can make payments and fund transfers in relation to subscription and acquisition of RMB bonds.
On the mainland, RMB cheques can be used for consumer spending in Guangdong Province, subject to a daily limit of 80,000 yuan per account.
Starting from July 2009, RMB cheques can be used for transferring funds between the "same-name" accounts held by the same enterprise at different banks for pooling RMB funds for trade settlement.
RMB bonds
Since 2007, mainland financial institutions, after obtaining relevant approval from mainland authorities, can issue RMB bonds in Hong Kong.
In 2009, the range of issuers was extended to the mainland subsidiaries of Hong Kong banks and the Ministry of Finance of the Central Government issued RMB bonds in Hong Kong for the first time. This is also the first RMB sovereign bond issuance outside the mainland.
To date, around 40 RMB bonds have been launched in Hong Kong with a total issuance size of over 80 billion.
Cross-border trade settlement
The launch of the pilot scheme for cross-border trade settlement in RMB on July 6, 2009 was a significant milestone in the continuing development of RMB business in Hong Kong.
The scope of RMB banking has been expanded with authorized institutions now offering a range of services for trade enterprises using RMB as the settlement currency for their trades with mainland.
The transaction volume of RMB trade settlement in Hong Kong has increased to 115.4 billion yuan by the end of March.
Securities
Hui Xian, the first RMB-denominated real estate investment trust owned by billionaire Li Ka-shing, went public in Hong Kong last Friday, marking a big step forward for the fast growing off-shore RMB market. (1 U.S. dollar is equivalent to 6.5 yuan)
