How Do Banking Systems in Russia, Iran, China, and North Korea Differ from America?

China's banking system has undergone significant evolution, offering a mix of traditional and modern payment methods tailored to its economic and digital advancements. Here's a closer look at the country's key banking and financial systems, drawing parallels with Indian and global practices while highlighting unique features.

Domestic Payment Systems

IBPS (Internet Banking Payment System)
- Transaction Range: Minimum 1 Yuan (via mobile) or 10 Yuan (bank-initiated); maximum 1 million Yuan.
- Comparison: Equivalent to India's IMPS, offering quick, convenient transactions.
CNAPS (China National Advanced Payment System)
- Transaction Range: Starts at 250,000 Yuan, with no upper limit.
- Comparison: Similar to India's RTGS, designed for large-value transfers.

Cheque Usage

Decline in Popularity: Cheques, once used for 18% of transactions in 2015, now account for just 0.3% in 2024.
High Cost and Limited Validity: A chequebook costs 75 Yuan (20 leaves) and takes 7–10 days to process, with cheques valid for only 10 days.

Automated Payment Systems (A-ECS)

Functionality: Allows users to schedule fund transfers (minimum 50 Yuan, no maximum) on specific dates to other accounts within Chinese banks.
Limits: Transfers cannot exceed 240% of the highest account balance from the past 90 days while maintaining the minimum balance.
Adoption: A-ECS is widely used and accessible through mobile banking.

Failure Consequences:

Fine: 5% of the transfer amount or 1,000 Yuan (whichever is higher).
Payment Obligation: Must be settled within 30 days to avoid civil and criminal charges, especially for sums exceeding 10,000 Yuan.

Digital Transactions

Alipay: Wallet-based system with batch settlement during peak hours but instant confirmations for merchants.

WeChat Pay: Links directly to debit/credit cards for seamless transactions, credited instantly.

Note: Unlike India's UPI-based apps like GPay, these platforms don't rely on bank accounts linked to mobile numbers.

ATM Usage

Declining Trend: Cash withdrawals are rare, with ATMs integrated with QR code functionality, enabling mobile banking withdrawals.

International Payment Systems

China utilizes three main systems for global transactions:

SWIFT: Operates in 207 countries/jurisdictions.

CIPS: Covers 80 countries, with over 3,000 Chinese branches exclusively connected.

BIPS: Limited to Mongolia, Myanmar, Cambodia, Laos, Vietnam, and the Solomon Islands.

KYC Rules

Exemptions: KYC requirements are waived for specific accounts, including those of government officials, military personnel, and low-volume accounts (<250,000 Yuan annually).

Loan Management

China's banking system differs in its approach to bad loans:

Mortgages: Classified as bad after 240 days of non-payment (compared to 90 days in India).

Other Loans:

Vehicle loans: 90 days.

Gold loans: 540 days.

Jade or silver loans: 365 days.

Credit card debts: Require a minimum payment of 8% plus late fees.

Special Considerations: Borrowers facing extraordinary circumstances, such as chronic illness or pregnancy, receive extended payment windows.

Banks operate from 8:30 AM to 5 PM, with a lunch break between 1 PM and 2 PM.

Account Opening: While initial setup is time-consuming, account holders rarely need to revisit the bank post-opening.

Discipline Policies: Officials cannot have overdrawn accounts or failed A-ECS payments exceeding the 30-day window.

China's banking system is a blend of efficiency, innovation, and tradition. With systems like IBPS, CNAPS, and A-ECS, it mirrors aspects of global banking while introducing unique mechanisms tailored to its economy. The decline of cheques, widespread use of digital wallets, and stringent loan management reflect China's shift towards a cashless and disciplined financial environment. These innovations demonstrate how China's financial systems cater to both domestic and international needs while setting benchmarks for modernization.