Study On The Laws Regulations Of The Internal Control Of Commercial Banks In China

With the guidance of conventional commercial bank internal controls theories and lead by the national Supervision department, the internal controls system of commercial banks in China has been established for years and yielded many good results. However, when we look at cases of internal controls failures such as the bankruptcy of Bank of Bahrain and huge loss of Societe Generale which has drawn the world’s attention to the subject of commercial banks internal controls, we should not be so assured or confident to say that similar situation will not happen to us under our commercial banks’current internal controls system. Rather we should be alert of the fact that the current internal controls system of our commercial banks is still far from perfect, and any defect of the system may incur great losses to the commercial banks; such fact has been repeatedly proven by various financial fraud cases, for example, fake bills from Qilu Bank in2012, hundred-million-yuan draft from Agricultural Bank of China in2011, fraud of bills valuing430million yuan from Yantai Bank in2012,forging of deposit bills condone by a bank employee and a real estate developer, etc.According to the "the external point of view" theory, it is impossible that an internal controls system set up by commercial banks themselves can completely serve the public benefits, and as a result government must come out with laws and regulations which can enforce how commercial banks must implement their internal controls system. Therefore, the enforcement of laws and regulations by national supervision department is the necessary and most effective way to resolve the problems derived from the defects of the current internal controls system of commercial banks. Based on principles of Laws, Economics and Management, this article is focused on the study of how to enhance the effect of commercial banks’ internal controls system by enforcing the laws and regulations, proposed a lawful, moderate, effective, human oriented, and practicable principle of development, and suggested the development idea of "Three Particularly and Two Commonly".