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（3） violates State provisions on the administration of foreign exchange；
（4） has not obtained approval documents for a construction project that should be reported to relevant departments for approval in accordance with State provisions；
（5） has not obtained the permission of an environmental protection department for a production， business or investment project；
（6） in the process of a system change， such as implementing contracting， leasing， joint venture， merger （merger by takeover）， co-operation， division， assignment of property rights for compensation， or restructure of a share system enterprise， has not paid off his or its pre-existing loan debts， fulfilled his or its pre-existing loan debts or provided appropriate security； or
（7） commits other serious illegal business activities.
3. No foreign currency loans may be granted to natural persons without the approval of the People's Bank of China；
4. No fees other than interest that is calculated and collected as stipulated by the People's Bank of China， may be collected on loans for one's own account and specially designated loans； no fees other than handling fees that are calculated and collected as stipulated by the People's Bank of China， may be collected on entrusted loans；
5. Funds shall not be advanced to the entrusting party， except where otherwise stipulated by the State； and
6. The lender shall strictly control fiduciary loans and actively promote secured loans.
PART SIX LENDING PROCEDURES
Article 25 Loan applications：
A borrower in need of a loan shall apply directly to the management organization of his or its banks or the loan organization of another bank.
A borrower shall fill in a “Loan Application” specifying main items such as the loan amount， purpose of the loan， repayment capability and repayment method， and provide the following information：
1. Main details of the borrower and the guarantor；
2. A financial report for the preceding year and a financial report for the period preceding the loan application， ratified and approved by the financial authorities or an accounting （auditing） firm；
3. Details of corrections to the unreasonable use of pre-existing loans；
4. A checklist of mortgaged or pledged property， proof of consent to such mortgages or pledges from the persons having the right to dispose of the property， and relevant documentary proof that the guarantor intends to provide a guarantee；
5. Project proposal and feasibility study report； and
6. Other relevant information that the lender may consider necessary to be provided.
Article 26 Credit rating of a borrower：
The credit rating of a borrower shall be assessed according to factors such as the quality of its leaders， his or its actual financial status， his or its fund portfolio， his or its history of honouring agreements， his or its business benefits and his or its development prospects. Ratings may be given independently and controlled internally by the lender， or be given by an appraisal organization approved by the authorized departments.
Article 27 Investigation of loans：
After a lender has received an application from a borrower， he or it shall carry out an investigation into the borrower's credit rating， as well as the legality， security， profitability， etc. of the loan， verify the details of the mortgaged or pledged property and guarantor， and assess the level of risks involved in the loan.
Article 28 Examination and approval of loans：
Lenders shall establish a loan administration system in which loan examination is separated from loan approval， and examination and approval is carried out at different levels. The examination personnel shall verify and appraise the information provided by the investigation personnel， re-assess the loan risks， provide suggestions， and in accordance with their stipulated limits of authority， submit the same for approval.
Article 29 Entry into a loan contract：
For all loans， a loan contract shall be entered into between the lender and the borrower. The loan contract shall stipulate the type， purpose， amount of the loan， interest rate on the loan， the lending term， repayment method， rights and obligations of the borrower and lender， liability for breach of contract and other matters that the two parties consider necessary to stipulate.
For a guaranteed loan， the guarantor and the lender shall enter into a guarantee contract， or the guarantor shall make a clear statement in the loan contract regarding the guarantee provisions discussed and unanimously agreed upon with the lender， which shall be sealed with the official seal of the guarantor legal person， and contain the signature and full name of the legal representative of the guarantor or of a representative authorized by him. For a mortgage loan or pledge loan， the mortgagor or pledgor and the lender shall enter into a mortgage or pledge contract， and where such contract is required to be registered， registration shall be handled in accordance with the law.
Article 30 Provision of loans：
The lender shall provide a loan on schedule in accordance with the arrangements of the loan contract. Where the lender fails to provide such loan on schedule in accordance with the contract， he or it shall pay a penalty for breach of contract. Where the borrower does not use the funds in accordance with the arrangements of the loan contract， he or it shall pay a penalty for breach of contract.
Article 31 Inspection after lending：
Upon provision of a loan， the lender shall carry out follow-up investigation and inspection of the borrower's implementation of the loan contract and business situation.
Article 32 Repayment of a loan：
The borrower shall repay the full amount of the principal with the interest thereon on time in accordance with the provisions of the loan contract.
One week prior to the date of maturity of a short-term loan， or one month prior to the date of maturity of a medium- or long-term loan， the lender shall send a notice to the borrower listing the principal to be repaid and interest due. The borrower shall promptly arrange the funds and repayment the principal with the interest thereon on time.
For overdue loans， the lender shall promptly issue a calling-in notice， and complete calling-in work for principal and interest on overdue loans.
For loans that are unable to be repaid in accordance with the term agreed upon in the loan contract， the lender shall add penalty interest in accordance with provisions. Where repayment cannot be made， or repayment of principal and payment of interest arrangements cannot be fulfilled， repayment shall be supervised and urged， or a civil case shall be initiated in accordance with the law.
Where the borrower wishes to repay the loan ahead of the term of such loan， he or it shall consult with the lender.
PART SEVEN SUPERVISION OF BAD LOANS
Article 33 Lenders shall establish and perfect a system of supervising loan quality， and classify， register， inspect and call in bad loans.
Article 34 “Bad loans” shall refer to dead loans， idle loans and overdue loans.
“Dead loans” shall refer to loans that are classified as bad loans in accordance with relevant provisions of the Ministry of Finance.
“Idle loans” shall refer to loans （excluding dead loans） that， in accordance with relevant provisions of the Ministry of Finance， are overdue （including those that fall due after extension of the term） by exceeding the stipulated time limit and that still are not repaid， or that although overdue or are not overdue because they do not exceed the stipulated time limit but were granted for production or business operations that have been suspended or for a project the construction of which has ceased.
“Overdue loans” shall refer to loans （excluding idle loans and dead loans） that have not been repaid by the date of maturity agreed upon in the loan contract （including those that fall due after extension of the term）。