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Jin-Kuan-Yin-(1)-09610000040
February 5, 2007
1. This is to interpret relevant dubious terms set forth in Article 12-1 of the Banking Act of the Republic of China and notify the items to be observed as follows:
(1) The term “self-use residence loans” provided in Paragraph 1 of this Article means that a national of the Republic of China, who has the full capacity to act, has no self-use residence currently; he/she takes a loan from a financial institution for the purposes of buying a self-use house. The term “consumer loans” means that small loans for the purposes of house repairs, durable consuming properties (including cars), payment of schooling, and other individuals’ small loans, as well as revolving credit of credit card.
(2) The term “sufficient collateral” provided in Paragraph 1 of this Article means that the outstanding loan amount of a borrower shall not be higher than the loan pledged or mortgaged to the borrower for the collateral submitted by the borrower at that time; the amount of the loan was equal to the value of the collateral submitted by the borrower and the value of the collateral was accurately appraised pursuant to Article 37 of the same Act. Once the value of the collateral drops, the bank shall require a guarantor(s), or shall require the client to submit an item that is corresponding to the said collateral.
(3) The term “shall be in a specific amount” provided in Paragraph 2 of this Article means that the purpose of the legislation shall be to make a guarantor to be acquainted with themselves the scope of his/her/its guarantee obligations and the guaranteed creditor’s rights shall be limited to the creditor’s rights derived from a specific legal relationship or the rights derived from a bill; additionally, the so-called “a specific amount” not only means a specific amount or principal debt agreed upon specifically, but also means the agreement of the amounts shall be agreed upon – the amounts include the interest on the principal debt, the penalty, the compensation for the damages, and other accessory charges as provided in Article 740 of the Civil Code .
(4) Based on the legislating objective of the impartial position to protect a borrower at the time of negotiating for a loan agreement or credit conditions, in the event that a bank must require a general guarantor(s) or joint and several guarantor(s), it shall be restricted to the act of strengthening the credit conditions and shall not circumvent the provisions of this Article without other obviously unfair circumstances, such as the circumstance under which the bank having acquired sufficient collateral still requires a co-borrower(s) or joint debtor(s), or requests a guarantor(s) to provide an agreement of maximum guarantee amount or to waive his/her right of defense to the effect requiring the bank to enforce against the borrower without effect before enforcing against the guarantor or joint debtor.
(5) The legislating objective of Paragraph 3 of this Article is to materialize the demand of procedural justice for first seeking return from a principal debtor and it is not limited to the condition, “compulsory execution … without results,” provided in Article 745 of the Civil Code. It is better to identify objectively the circumstance of “the remaining portion of a return” on the basis of the economic essence; a creditor who can be proved to have no means or be unable to pay off indeed after the implementation of the relevant procedure for seeking return (including calling and collecting debts from a creditor, investigating property conditions, and applying and retrieving the information about tax payments and the information about properties of the creditor from the Financial Data Center, Ministry of Finance) is deemed to fall under the category, the circumstance of “the remaining portion of a return.”
(6) The application of self-use residence loans and of consumer loans which are expressly provided in Paragraph 1 of this Article shall have the legislating objective, to protect consumers primarily. On the other hand, with respect to loans to enterprises, the majority of enterprises, themselves, have reciprocity to negotiate conditions for concluding contracts with banks; therefore, in point of the systematic interpretation, it is better for the scope of the application of Paragraphs 2 and 3 of this Article to be limited and contracted purposively and “self-use residence loans” and “consumer loans” listed in Paragraph 1 shall apply to enterprises.
(7) The old agreements on “self-use residence loans” or “consumer loans” which were concluded before the amendment of the Banking Act of the Republic of China came into effect on November 1, 2000, and which continue to be effective shall be continue to apply until the expiration of the agreements. Nevertheless, in case that a borrower or joint and several guarantor requests his/her/its bank to modify the content of the agreement for the purpose of exempting the obligations of the joint and several guarantor or to change the scope of the guarantee obligations, the bank shall refer to the legislating objective of this Article and negotiate jointly with him/her/it through a mutual agreement.
(8) In order to avoid the occurrence of disputes, a bank shall handle self-use residence loans or consumer loans pursuant to this Article; when it requires a joint and several guarantor as a result of having not acquired sufficient collateral from its client, it shall explain to the joint and several guarantor his/her/its guarantee liability and risks of guarantee adequately. When the bank handles the mortgage of collateral, it shall enable the provider of the collateral to comprehend the scope of the indebtedness of the mortgage. After the debtor or the provider of the collateral has paid off the guaranteed debts and the loans completely and requests proof of paying off the mortgage from the bank, the bank shall issue the proof to him/her/it immediately and shall not make excuses.
A bank shall incorporate the provision of the preceding Paragraph into its regulations of the internal control system and shall list the handling circumstances stated in the preceding Paragraph in the internal audit.
2. Tai-Tsai-Rong-Zi-90700080 dated January 2, 2001 of the Ministry of Finance shall be ceased to apply from this day onwards. |