Beijing has moved to stop foreign and domestic banks from helping clients redeem hard-currency loans ahead of maturity, to stem fears the yuan is to be devalued.
The People's Bank of China and State Administration of Foreign Exchange (Safe) issued a circular to banks banning the practice with immediate effect, in what analysts said was a bid to prevent a build-up of devaluation pressures on the currency.
'The rules state there should be no early repayment of [foreign currency] loans if this is not provided for in loan agreements,' a European banker said.
Where such provisions exist, early repayments must be checked and approved by Safe and must be done with firms' own hard currencies.
Foreign bankers said this meant they were no longer allowed to help clients to secure yuan borrowings from mainland banks for conversion into hard currency to redeem loans.
'This is strictly forbidden now,' a Japanese banker said.