Banking Bureau, Financial Supervisory Commission, R.O.C.: Laws and Regulations Retrieving System of the Banking Bureau

Supervisory Indicator and Related Supervisory Measures for Delinquent Credit Card Accounts
(29 June 2004)

Letter Ref. Tai-Tsai-Rong-(IV)-0934000442

Subject: To strengthen the quality of credit card issuance by financial institutions and the soundness of business operations thereof, a supervisory indicator and related supervisory measures for delinquent credit card accounts are hereby prescribed as set out in the "Statement." Please be advised and forward the information herein.

Statement:

1. Pursuant to Article 61-1 of the Banking Act and in response to the letter dated 10 May 2004 (ref. Cyuan-Sin-1146) from the Bankers Association of the Republic of China.

2. The standard supervisory indicator for delinquent credit card accounts in the present case is "the ratio of accounts delinquency by six months or more to the balance of accounts receivable (including accounts under collection)." The source of data for this indicator is the data reported by the 15th of each month for the previous month-end by all credit card issuing institutions on the Internet reporting system of the Banking Bureau. Beginning with the data reported by the card issuing institutions for the end of June 2004, this supervisory indicator is disclosed monthly in the "Financial Information Disclosures" pages of the Banking Bureau web site (http://www.banking.gov.tw). Each card issuing institution shall be responsible for ensuring the accuracy and timeliness of reported data.

3. Where the credit card account delinquency ratio is high, the Ministry of Finance (MOF) will adopt the following supervisory measures pursuant to Article 61-1 of the Banking Act:
(1) Where the delinquency ratio is 3 percent or above but lower than 5 percent, the card issuing institution will be notified in writing to exercise care to avoid deterioration of the quality of its credit card assets, and to lower the delinquency ratio to below 3 percent within a 3 month time limit. If the delinquency ratio has not been lowered to below 3 percent by the deadline, an official reprimand will be issued.
(2) Where the delinquency ratio is 5 percent or above but lower than 8 percent, it will be given an official reprimand, and the card issuing institution is required to lower the delinquency ratio to below 5 percent within a 3 month time limit. If it is unable to lower the delinquency ratio to below 5 percent by the deadline, its credit card issuance business (excluding re-issuance of lost cards) will be temporarily suspended, and it may not accept applications for credit cards. Where the delinquency ratio has already fallen to not lower than 3 percent but lower than 5 percent, the supervisory measures set out in the preceding subparagraph will be taken.
(3) Where the delinquency ratio is 8 percent or above, its credit card issuance business (excluding re-issuance of lost cards) will be temporarily suspended, and it may not accept applications for credit cards.

4. These provisions will enter into force beginning from the reporting of the data for the end of October 2004 by the credit card issuing institutions.