The incorporation of CDB is an integral part of the overall banking reform strategy as well as an important outcome in turning around policy banks into commercial banks. Being a commercial bank, CDB will be able to provide loans to strategic projects, extend short-term, medium-term and long-term credit to customers, and absorb deposits except for individual’s savings. It will no longer engage in policy banking business.

To ensure the business continuity, the CBRC agrees that the RMB bonds issued by the CDB before its incorporation will continue to enjoy sovereign rating and 0% risk weight until maturity. And the RMB bonds issued by the CDB after its incorporation until 2010 will have 0% risk weight, and after 2010, its risk-weight will be determined by the CBRC on market basis. The guarantees offered by the CDB will have similar risk weights as commercial banks since CDB’s incorporation.

After the incorporation, CDB will be regulated as other commercial banks. The CBRC will apply the Law of Commercial Banks and the Law of Banking Regulation and Supervision to it. The supervision will focus on capital adequacy ratio and risk management to promote its corporate governance, internal controls. The aim is to build an innovative and competitive CDB with strong capital base, strict risk controls, sound operation, and excellent performance.