December 1, 2016 / 2:55 AM / 9 months ago

China sets new rules on overseas yuan loans in fight to curb outflows - sources

SHANGHAI, Dec 1 (Reuters) - China's central bank has circulated new rules for companies which make yuan-denominated loans to overseas entities, sources with direct knowledge of the matter said, the latest in a slew of measures by Beijing to control capital outflows.

The move comes after the yuan fell to more than eight-year lows, fueling attempts by firms to get their money out and leading to Beijing taking aim at outbound investments and underground banks suspected of aiding capital flight.

The party making a yuan loan to an overseas entity must first register the loan with the State Administration of Foreign Exchange (SAFE) - the foreign exchange regulator - and must keep the loan within a certain limit, the sources told Reuters on Thursday. The limit was not specified.

The People's Bank of China (PBOC) did not immediately respond to a request for comment.

The lender also has to have been registered for at least a year, and the borrower has to be a related entity, according to the guidelines.

A lender cannot make a personal loan to an overseas borrower, and also cannot use debt financing for the purpose of an overseas loan to a foreign entity. (Reporting by Zhang Jingdong, Li Zheng and Engen Tham in Shanghai; Writing by Shu Zhang in Beijing; Editing by Kim Coghill)

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