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National People's Congress
Promulgation Date: 1999.3.15
Effective Date: 1999.10.1
CHAPTER 12 CONTRACTS FOR LOANS
Article 196 A loan contract refers to a contract whereby the borrower raises a loan from the lender, and repays the loan with interest thereof when it becomes due.
Article 197 Loan contracts shall be in written form, except as otherwise agreed upon by natural persons in respect of loans between them. The contents of a loan contract shall contain such clauses as the category of loans, the kind of currency, the purpose of use, the amount, the interest rate, the term and the method for returning the loan.
Article 198 In concluding a loan contract, the lender may require the borrower to provide a guaranty. The guaranty shall abide by the provisions of the Guaranty Law of the People's Republic of China.
Article 199 In concluding a loan contract, the borrower shall provide with the truthful information about the business activities and financial conditions relating to the loan according to the requirements of the lender.
Article 200 The interest of the loan shall not be deducted from the principal in advance. Where the interest is deducted in advance from the principal, the loan shall be repaid and the amount of the interest calculated according to the actual amount of the loan.
Article 201 Where the lender fails to extend the loan in accordance with the agreed date and amount and causes losses to the borrower, the lender shall compensate for the losses. Where the borrower fails to accept the loan in accordance with the agreed date and amount, the borrower shall pay the interest according to the agreed date and amoant.
Article 202 The lender may inspect and supervise the use of the loan in accordance with the terms of the contract. The borrower shall provide regularly the relevant financial statements and other materials to the lender in accordance with the terms of the contract.
Article 203 Where the borrower fails to use the loan in accordance with the agreed usage of the loan, the lender may cease in extending the loan, recall the loan ahead of time or rescind the contract.
Article 204 Loan interest rates of the financial institutions conducting loan business shall be determined according to the upper limit and lower limit of loan interest rates stipulated by the People's Bank of China.
Article 205 The borrower shall pay the interest in accordance with the agreed time limit. Where there is no agreement in the contract as to the time limit for payment of interest or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the interest shall be paid at the time when the loan is returned for loans under a term of less than one year; as for loans under a term of more than one year, the interest shall be paid at the time when every one full year expires, and if the remaining term is less than one year, the interest thereof shall be paid at the time when the loan is returned.
Article 206 The borrower shall return the loan in accordance with the agreed time limit in the contract. Where there is no agreement in the contract as to the loan term or such agreement is unclear, nor can it be determined according to the provisions of Article 61 of this Law, the borrower may return the loan at any time, and the lender may urge the borrower to return the loan within a reasonable time limit.
Article 207 Where the borrower fails to return the loan in accordance with the agreed time limit, the borrower shall pay overdue interest according to the terms of the contract or the relevant provisions of the State.
Article 208 Where the borrower returns the loan ahead of time, except as otherwise agreed upon between the parties, the interest thereof shall be calculated according to the actual term of the loan.
Article 209 The borrower may apply to the lender for an extension of the loan return term before the loan term expires. If the lender consents, the term may be extended.
Article 210 A loan contract between natural persons shall come into force as of the time when the lender extends the loan.
Article 211 If there is no agreement in a loan contract between natural persons as to the payment of interest or such agreement is unclear, it shall be deemed as non-payment of interest. If the payment of interest is agreed in a loan contract between natural persons, the loan interest rates shall not violate the provisions of the State on the restriction on loan interest rates