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Explanation to the Items of Unsecured Personal Loans Applied for the Provision Providing that a Debtor’s Total Debt Balance at All Financial Institutions (Including Credit Cards, Cash Cards and Credit Loans) Should not Exceed the Average Monthly Income by 22 Times’ (hereafter called ‘DBR22×’)
Issuing Agency: Financial Supervisory Commission, Executive Yuan
Date of Issue: January 07, 2008
Ref. No.: Letter Jin-Kuan-Yin-(4)-Zi-09600523370
Subject: With respect to the items of unsecured personal loans that you reported to exclude the application of the provision that a debtor’s total debt balance at all financial institutions (including credit cards, cash cards and credit loans) should not exceed the average monthly income by 22 times’ (hereafter called ‘DBR22×’), the response with respect to the report is provided in the Explanation. Kindly acknowledge receipt of the letter.
Explanation:
1. This letter is a response to your Letter Chuan-Shou-Hsiao-Zi-3237 dated November 22, 2007.
2. The items of unsecured personal loans which we agree that the application of DBR22× may be excluded are as follows:
(1) The purpose of unsecured personal loans is for starting a business, working capital of the enterprise operated by the borrower, construction finance, loans for bid security and agriculture, and a bank handles above-mentioned loans pursuant to the credit granting procedures for ’enterprise customers,’ and complying the regulations of credit reviewing and granting which is related to granting credit to enterprises formulated by you.
(2) Unsecured Personal loans are secured by collateral within ‘a certain reasonable period’, including ‘taking a court auction house to prepay for bid security and for a loan for the balance amount’, ‘the subscription of securities (convertible bonds) by the staff of an enterprise’, ‘a construction finance loan for a house built by a person and resided by the same person’, and ‘participating in a loan for urban renewal program.’ The above-mentioned period may not exceed six months; however, for a construction finance loan for a house built by a person and resided by the same person, the said period can be extended to three years maximally. If the person applying for the construction finance loan has special causes and provides his or her reasons to the financial institution, the certain reasonable period may be extended to five years. For a person who participates in a loan for urban renewal program, the certain reasonable period may be extended to six years maximally.
(3) With respect to the loans on which we had agreed to exclude the application of DBR 22× previously, we have summarized these loans into the following:
a. Policy-based student loans. When a policy-based student loan is due and the payee starts to pay off the loan, the financial institution shall still handle the loan pursuant to DBR 22x.
b. Loans which are handled in accordance with the National Youth Commission’s Regulations for Young Entrepreneurs and the Regulations governing Loans for Starting Micro-Businesses which was promulgated by the Small and Medium Enterprise Administration, Ministry of Economic Affairs.
c. Policy-based ‘youth overseas experience loans’ provided by the National Youth Commission.
d. For a person who applies for a National Travel Card and exceeds DBR 22×, the financial institution processing such an application may still issue a National Travel Card, and the line of credit issued to the applicant shall be limited to the amount of subsidies for compulsory vacation, which may be received the applicant.
e. ‘Loans for micro-economic activities by indigenous peoples’ provided by the Council of Indigenous Peoples, Executive Yuan.
f. Credit guarantee loans provided by the Agricultural Credit Guarantee.
g. Other cases which are, for special efforts, approved to exclude the application of DBR 22×.
3. As regards the measure proposed by you that the bank cannot set secured real rights for the collateral within the reasonable period and its default in performance results that, after the calculation of the balance of the loan of its loan customer, the balance exceeds the average monthly income by 22 times, kindly notify every member institution to cooperatively handle the measure which the bank adjusts the control of the credit line.
4. Our Letter Jin-Kuan-Yin-(4)-09500273850 dated September 6, 2006 approved your suggestion that ‘unsecured’ loans needed not include partial secured loans – in other words, partial secured loans and collateral security loans may be excluded from the application of the provision on DBR 22× – Each financial institution which undertakes such a type of loan shall still handle it thoroughly so as to conform to the purpose of the provision on DBR 22×. It also must pay attention to related risk control.
To (The Original): The Bankers Association of the Republic of China （kindly notify each member institution including foreign bank branches in Taiwan and card issuing institutions）
To (Copy): National Federation of Credit Cooperatives; Joint Credit Information Center; Banking Bureau of the Commission |