Overview

The bank promises to pay the amount indicated on the draft to the payee or bearer at the request of the drawer with no string attached upon maturity.  This acceptance is an act of granting credit to the drawer.

Target Client
Legal-person businesses (or non-profits) or other economic organizations registered with the industrial and commercial administration or their supervising institutions.

Eligibility
1. a deposit account at the drawee bank.

2. based on genuine and legal exchange of commodities or labor, and specifying the use of bank draft for settlement in the contract;

3. the drawer¡¯s creditworthiness and reliable source of funds for payment on maturity;

4. the drawer¡¯s good credit history with CCB

5. the following forms of guaranty

£¨1£©a deposit of 10% for clients with an AA rating, and mortgage, pledge or a third-party guarantor acceptable to the drawee bank to back the remaining amount;

£¨2£©a deposit of 20% for clients with an A rating, and mortgage, pledge or a third-party guarantor acceptable to the drawee bank to back the remaining amount;

£¨3£©a deposit of 50% for clients with a BBB rating, and mortgage, pledge or a third-party guarantor acceptable to the drawee bank to back the remaining amount; 

£¨4£©A deposit of 100% for clients with a BB rating or lower;

£¨5£©Clients with a BBB rating or above may choose to provide mortgage, pledge or a third-party guarantor acceptable to the drawee bank to back the full amount.

Clients with an AAA rating are exempt from this requirement.

Procedures
1¡¢ Draft.  The bank reviews the drawer¡¯s application for a draft.  If the bank approves the application, the drawer purchases a blank draft from the drawee bank, fills it out, and stamps it with its seal, of which the bank has a copy.

2¡¢Requesting Acceptance.  The drawer applies to the bank for acceptance, and the bank accepts the draft.

3¡¢ Handling fee.  The bank stamps the draft with a special seal of acceptance, and the applicant pays a handling fee of 0.05% of the draft amount.

4¡¢Receiving the draft.  The applicant receives the draft accepted by the bank.

5¡¢Circulation.  A. The applicant gives the banker¡¯s acceptance to the payee to settle payments with the payee; B. The payee may endorse the banker¡¯s acceptance and transfer the acceptance to its creditor; C. The payee or bearer may present the banker¡¯s acceptance to the bank as a pledge or for cash payment.

6¡¢Payment Request.  Within the payment period, the payee or bearer may present the banker¡¯s acceptance to the bank with which it has an account and ask it to collect payment from the drawee bank.  After the payment period, the payee or bearer¡¯s bank may not collect the payment.  However, the drawee bank and the drawer are still liable as long as the payee or bearer provides a justification.

Maturity and Price

The banker¡¯s acceptance matures within six months, and its amount must not exceed RMB 50 million.  The drawer pays the bank a handling fee of 0.05% of the draft amount.  If the drawer fails to pay the draft amount upon maturity and the bank has to provide the funds, the drawer must pay an interest on the amount the bank provides at the rate for overdue loans.