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Inbound guarantee (外保内贷)
Practical Law UK Glossary 3-592-1807 (Approx. 2 pages)
Glossary
Inbound guarantee (外保内贷)
Cross-border guarantee or any other form of cross-border security provided by an offshore guarantor or security provider to secure an obligation owed by an onshore primary obligor to an onshore beneficiary. Participants to an inbound guarantee must satisfy the following criteria:
- The beneficiary must be an onshore financial institution.
- The primary obligor must be an onshore non-financial institution.
- The guaranteed or secured obligation must be RMB or foreign currency loans (excluding entrustment loans) or other committed financing arrangements.
- The formality of the guarantee or security must comply with applicable Chinese and foreign laws and regulations.
The State Administration of Foreign Exchange (SAFE) has the right to approve inbound guarantees that do not meet these criteria on a case-by-case basis, but in practice this is extremely rare.