Chapter I General Provisions |
| Article 1 |
（Purpose of legislation）This Act is enacted to strengthen the banking business operations, to protect depositors’ rights, to coordinate with the industrial development and to enable the cooperation of bank credits with the national financial policy. |
| Article 2 |
（Definition of Bank）The term "bank" as used in this Act shall refer to an organization formed and registered in accordance with this Act and engaging in banking businesses. |
| Article 3 |
（Scope of Business of Banks）A bank may engage in the following businesses:
1.Accepting checking deposits;
2.Accepting various kinds of other deposits;
3.Managing trust funds under entrustment;
4.Issuing bank debentures;
5.Extending loans;
6.Discounting bills and notes;
7.Investing in securities;
8.Direct investment in productive enterprises;
9.Investing in residential construction and business construction;
10.Conducting domestic and foreign remittances;
11.Accepting commercial drafts;
12.Issuing letters of credit;
13.Conducting domestic and foreign guarantees;
14.Acting as collecting and paying agent;
15.Underwriting and trading in securities for its own account or for customers;
16.Managing and advising the issuance of bonds and debentures;
17.Acting as attestors for the issuance of stocks, bonds and debentures;
18.Managing various kinds of property under entrustment;
19.Conducting businesses related to securities investment trusts;
20.Trading in gold bars/coins, silver bars/coins and foreign currencies;
21.Conducting warehousing, custody and agency service businesses in relation to the businesses of the foregoing paragraphs; and
22.Conducting other relevant businesses authorized by the central competent authority. |
| Article 4 |
（Authority Over Scope of Business ）The business items of each bank shall be determined individually by the central competent authority in accordance with the bank’s classification and within the business scope specified in this Act, and shall be stated on the bank’s business license. However, business operations related to foreign exchange shall be approved by the Central Bank of the Republic of China. |
| Article 5 |
（Terms of Credit ）Credit extended by a bank under this Act is short-term credit if it matures within no more than one (1) year; medium-term credit if it matures in more than one (1) year and no more than seven (7) years; and long-term credit if it matures in more than seven (7) years. |
| Article 5- 1 |
（Definition of Accepting Deposits）The term "accept(ing) deposits" as used in this Act shall refer to the act of accepting payments or receiving funds from the general public and agreeing to return the principal or to pay an amount equal to or greater than the principal. |
| Article 5- 2 |
（Definition of Extend(ing) Credit）The term "extend(ing) credit" as used in this Act shall refer to the extension of loans, extension of overdraft facilities, discount of bills and notes, extension of guarantees, acceptance of drafts, and other businesses specified by the central competent authority as conducted by a bank. |
| Article 6 |
（Definition of Checking Deposit）The term "checking deposit" as used in this Act shall refer to a deposit which may be drawn at any time without interest by, as agreed, a check signed by the depositor or by the use of automatic equipment of mandated payment. |
| Article 7 |
（Definition of Demand Deposit）The term "demand deposit" as used in this Act shall refer to a deposit which can be drawn by the depositor at any time by a passbook or by other agreed means. |
| Article 8 |
（Definition of Time Deposit）The term "time deposit" as used in this Act shall refer to a deposit with a fixed term which can be drawn by the depositor by a deposit certificate or by other agreed means. |
| Article 8- 1 |
（Termination and Pledge of Time Deposits）Time deposits shall not be drawn before
maturity, provided that the depositor may pledge a time deposit or terminate it by giving seven (7) days prior notice to the bank.
Rules governing the pledge and early termination in the preceding paragraph shall be prescribed by the competent authority after consulting with the Central Bank of the Republic of China. |
| Article 9 |
Deleted |
| Article 10 |
（Definition of Trust Funds）The term "trust funds" as used in this Act shall refer to funds which are received by a bank in the trustee’s position and managed in accordance with the terms of a trust agreement for the interest of a beneficiary designated by the trustor. |
| Article 11 |
（Definition of Bank Debentures）The term "bank debentures" as used in this Act shall refer to bonds/debentures issued by a bank in accordance with the relevant provisions of this Act whose issuance is approved by the competent authority. |
| Article 12 |
（Definition of Secured Credit）The term "secured credit" as used in this Act shall refer to a bank’s extension of credit which is secured by one of the following means:
1.Mortgage over immovables or movables;
2.Pledge over movables or rights;
3.Bills/Notes receivable arisen from business transactions of a borrower;
4.Guarantees extended by a governmental treasury agency, a bank or a credit guarantee institution authorized by the government. |
| Article 12- 1 |
（Limitation on Guarantee）In extending self-use residence loans or consumer loans, a bank shall not require borrowers to provide joint and several guarantor(s).
In extending self-use residence loans or consumer loans, if a bank has obtained sufficient security prescribed in the preceding article, it shall not require borrowers to provide guarantor(s).
Except for the preceding paragraph, if a bank requires guarantor(s) when extending credits, the guaranty shall be in a specific amount.
In seeking repayment, a bank shall first pursue the borrower; when the repayment is insufficient and there are multiple guarantors, it shall pursue the guarantors on a pro-rata basis; provided that the above shall not apply to applications for enforcement titles or provisional remedies proceedings. |
| Article 12- 2 |
（Validity period of the guarantee agreement）For guarantors required for self-use residence loans or consumer loans, the duration of the guaranty contract shall not exceed fifteen years from the date of the contract formation unless consented by the guarantor in writing. |
| Article 13 |
（Definition of Unsecured Credit）The term "unsecured credit" as used in this Act shall refer to a credit extended without the security prescribed in any of the paragraphs in Article 12. |
| Article 14 |
（Definition of Medium-or Long-term Loan Repayable in Installments）The term "medium- or long-term loan repayable in installments" as used in this Act shall refer to a loan extended by a bank based on the borrower’s ability to repay the debt, in which the methods to repay the principal and interest in installments and other relevant terms to be observed by the borrower are stated in the loan agreement agreed between the lending and borrowing parties. |
| Article 15 |
（Definition of Commercial Negotiable Instrument）The term "commercial negotiable instrument" as used in this Act shall refer to a bill of exchange or promissory note issued in connection with domestic or foreign trade in goods or services.
The bill of exchange in the preceding paragraph is called a commercial acceptance when its payor is the recipient of the goods sold or services provided and has accepted it.
The bill of exchange is called a banker’s acceptance when the recipient in the preceding paragraph mandates a bank as the payor and the bill of exchange is accepted by the bank. The same applies to cases where a person who sells goods or provides services signs and issues a bill of exchange in the transaction amount based on transaction documents and mandates a bank as the payor, and such bill of exchange is accepted by the bank.
A bank’s purchase of a post-dated bill of exchange or promissory note by means of deducting non-accrued interest in advance shall be called a discount. |
| Article 16 |
（Definition of Letter of Credit）The term "letter of credit" as used in this Act shall refer to an instrument which a bank, mandated by a customer, notifies and authorizes a designated beneficiary to issue a bill of exchange or other certificates, in accordance with a prescribed form and in an amount not exceeding a certain limit, to be accepted or paid by the bank or its designated correspondent upon the beneficiary’s performance of agreed terms and conditions. |
| Article 17 |
Deleted. |
| Article 18 |
（Definition of Responsible Person of a Bank）The term "responsible person of a bank" as used in this Act shall refer to the person designated to be responsible in accordance with the Company Act, other laws or the articles of incorporation of the relevant bank. |
| Article 19 |
（Competent authority）The term "competent authority" as used in this Act shall refer to the Financial Supervisory Commission. |
| Article 20 |
（Categories of banks）The term "bank" as used in this Act shall be classified into the following three types:
1.Commercial banks;
2.Specialized banks; and;
3.Investment trust companies.
Except for those banks incorporated by the government, a bank’s type and specialization shall be stated in its name.
A non-bank shall not use a name prescribed in Paragraph 1 or name that would likely cause people to mistake it as a bank. |
| Article 21 |
（Requirement of Formation Procedures）A bank and its branch office shall not commence business operations before having completed the incorporation procedures prescribed in Chapter II of this Act. |
| Article 22 |
（Restrictions on Business Activity）A bank shall not conduct any business unauthorized by the central competent authority. |
| Article 22- 1 |
（Exemptions for experiments under Financial Regulatory Sandbox rules）To promote the development of inclusive finance and financial technology, an applicant, not limited to banks, may apply to engage in an innovative experiment in banking businesses pursuant to the Act of Financial Technology Development and Innovative Experiment.
The innovative experiment in the preceding paragraph may be exempt from the requirements of this Act during the period and within the scope authorized by the competent authority.
The competent authority shall take into account the outcomes of the innovative experiment in Paragraph 1 and review the appropriateness of this Act and relevant financial laws and regulations. |
| Article 23 |
（Minimum Capital Requirements）The minimum capital requirements for different types of banks shall be determined or adjusted by the central competent authority after it divides the nation into different regions and examines the population and economic development conditions in each region and the type of bank, respectively.
In the event that a bank's capital falls below the adjusted minimum requirements prescribed in the preceding paragraph, the central competent authority shall prescribe a period of time and order such bank to increase its capital; it shall revoke such bank's permit if the bank fails to complete the capital increase within such period of time. |
| Article 24 |
（Currency of Capital）The capital of a bank shall be denominated in terms of the national currency. |
| Article 25 |
（Bank stocks）The shares issued by a bank shall be registered shares.
The same person or same related party who singly, jointly or collectively holds more than five percent (5%) of a bank's outstanding voting shares shall report such fact to the competent authority within ten (10) days from the day of holding; the same applies to each cumulative increase or decrease in the shareholding by more than one percent (1%) thereafter.
The same person or same related party who intends to singly, jointly or collectively hold more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of a bank's outstanding voting shares shall, respectively, apply for prior approval of the competent authority.
A third party who holds shares on behalf of the same person or same related party in trust, by mandate or through contracts, agreements, authorization, or other means shall fall within the purview of the same related party.
The same person or same related party who singly, jointly or collectively holds more than five percent (5%) but less than fifteen percent (15%) of a bank's outstanding voting shares prior to the implementation of the amendment to this Act on December 9, 2008 shall report such fact to the competent authority within six (6) months from the implementation date of the said amendment. Those who report to the competent authority within the prescribed period may maintain their shareholding percentage at the time of reporting. However, those whose original shareholding is more than ten percent (10%) shall apply for the prior approval of the competent authority when they intend to increase their shareholding for the first time thereafter.
The regulations governing the qualification requirements for the same person or same related party who applies for approval pursuant to Paragraph 3 hereof or the proviso of the preceding paragraph, required documentation, shares to be acquired, purpose, funding sources, and other matters to be complied with shall be prescribed by the competent authority.
Where the same person or same related party who holds a bank’s outstanding voting shares without filing a report with or obtaining approval from the competent authority in accordance with the provisions set forth in Paragraphs 2, 3 or 5 hereof, their exceeding shares shall not have voting rights, and the competent authority shall order them to dispose of the shares within a prescribed period.
If the same person or the principal and their spouse and minor children holds more than one percent (1%) of a bank's outstanding voting shares, the principal shall notify the bank thereof. |
| Article 25- 1 |
（Related parties of bank stocks）The term "same person" as used in the preceding article shall refer to the same natural or juridical person.
The term "same related party" as used in the preceding article shall refer to parties related to the same natural or juridical person. The scopes are as follows:
1. Parties related to the same natural person:
(1) The principal, their spouse and relatives by blood within the second degree of kinship.
(2) An enterprise in which the persons prescribed in the preceding subparagraph collectively hold more than one third (1/3) of its outstanding voting shares or capital.
(3) An enterprise or foundation in which the persons prescribed in Subparagraph (1) act as its chairperson, general manager or the majority of its directors.
2. Parties related to the same juridical person:
(1) The same juridical person, its chairperson and general manager, and the spouse and relatives by blood within second degree of kinship of the chairperson and general manager.
(2) Enterprises in which the same juridical person and natural persons prescribed in the preceding subparagraph hold more than one-third (1/3) of their outstanding voting shares or capital or act as their chairperson, general manager or the majority of their directors.
(3) The affiliates of the same juridical person. The term "affiliate" shall be defined by Articles 369-1 through 369-3, 369-9 and 369-11 of the Company Act.
The calculation of a bank’s shares held by the same person or same related party under the preceding two paragraphs shall exclude shares held under the following circumstances
1. Shares acquired by a securities firm during the underwriting period of the securities and disposed of during the period prescribed by the competent authority.
2. Shares acquired by a financial institution due to the assumption of security and four years have not elapsed since the date of acquisition.
3. Shares acquired by inheritance or bequest and two years have not elapsed since the date of inheritance or bequest. |
| Article 26 |
（Restrictions on additional branches）The central competent authority may restrict the establishment of banks or their branches in specific regions depending on the domestic financial and economic conditions. |
| Article 27 |
（Approval for foreign branch institutions）The establishment of overseas branches by a bank shall obtain the approval of the central competent authority after consultation with the Central Bank of the Republic of China. |
| Article 28 |
（Operations in trust or securities services）Where a commercial bank or a specialized bank conducts trust or securities businesses, the business and accounting shall be independent; rules governing the operation scope and risk management of such businesses shall be prescribed by the competent authority.
A bank conducting trust or securities businesses shall appropriate operational funds exclusively for such business operations. The amount of the appropriated operational funds shall be approved by the competent authority.
Unless otherwise provided by other laws, a bank conducting trust businesses shall be subject to the provisions of Chapter Six of this Act.
Unless otherwise provided by other laws or rules prescribed by the competent authority, a bank's staff conducting trust or securities businesses shall keep customer correspondence and transaction data confidential; the same applies to their dealings with staff of the bank’s other departments. |
| Article 29 |
（Principles of professional business ）Unless otherwise provided by laws, a non-bank shall not conduct the business of accepting deposits, managing trust funds or public property under entrustment or handle domestic or foreign remittances.
The competent authority or the competent authority in charge of the particular enterprise, together with the juridical police authority, shall ban the violation of the preceding paragraph and refer the case to justice. If the person concerned is a juridical person, the responsible person shall be jointly and severally liable for repaying the relevant obligations.
In performing the duties in the preceding paragraph, the suspected party's accounting books and documents may be searched and detained in accordance with the law, and the signs and other facilities may be demolished or disposed by other necessary means. |
| Article 29- 1 |
（Act of accepting deposits）Accepting payments or receiving funds from multiple persons or unspecified persons in the name of borrowing, accepting investments, becoming a shareholder or others and agreeing to pay or paying a bonus, interest, dividend interest, or other rewards in an amount obviously inequivalent to the principal shall be deemed accepting deposits. |
| Article 30 |
（Exemption or extension on the occupation of lien registration or transfer of collaterals）Where a bank extends loans, issues letters of credit or issues guarantees, and the borrower, mandator, or the guaranteed which is a company limited by shares and whose board of directors resolves to issue a written commitment to the bank offering certain property as security and agreeing not to pledge or mortgage the same property to their other creditors, the bank may permanently or temporarily waive the registration of mortgages over immovables or movables or the transfer of possession of the pledged property. However, the debtor shall supplement it within a period of time prescribed by the bank when the bank considers it necessary.
Where the borrower, mandator, or guaranteed breaches the commitment in the preceding paragraph, their directors and actors who participated in deciding the breach shall be jointly and severally liable for the compensation. |
| Article 31 |
（Letter of credit or acceptance business）Where a bank issues letters of credit or undertakes to accept commercial negotiable instruments, its rights and obligations with customers shall be governed by an agreement.
Where a bank conducts the businesses in the preceding paragraph and requires the customer to provide security, such security shall comply with each paragraph of Article 12 of this Act. |
| Article 32 |
（Restrictions on Extending Unsecured Credit to Interested Parties）A bank shall not extend unsecured credits to enterprises in which the bank holds three percent (3%) or more of their total paid-in capital, the bank’s responsible persons, staff, major shareholders, or any interested party of the bank’s responsible persons or the staff in charge of credit extensions; provided that consumer loans and loans extended to the government are excluded.
The credit amount of the consumer loans in the preceding paragraph shall be prescribed by the central competent authority.
The term "major shareholder" as used in this Act shall refer to a shareholder who holds one percent (1%) or more of the bank’s total amount of outstanding shares. Where a major shareholder is a natural person, the shares held by their spouse and minor children shall be counted in their shareholding. |
| Article 33 |
（Restrictions on Extending Secured Credit to Interested Parties）Where a bank extends secured credits to enterprises in which the bank holds five percent (5%) or more of their total paid-in capital, the bank’s responsible persons, staff, major shareholders, or any interested party of the bank’s responsible persons or staff in charge of credit extensions, the security shall be fully sufficient and the terms shall not be more favorable than those terms offered to other same category customers. Where the credit amount exceeds the amount prescribed by the central competent authority, the bank shall obtain the consent from three-quarters or more of the bank's presenting directors attended by two-thirds or more of the bank’s directors.
The credit amount limits, aggregate credit amount, credit terms and the same category credit customers referred to in the preceding paragraph shall be prescribed by the central competent authority after consultation with the Central Bank of the Republic of China. |
| Article 33- 1 |
（Related parties of bank clerks）The interested parties referred to in the preceding two articles refer to the following persons:
1.Spouse, relatives by blood within the third degree of relationship or relatives by marriage within the second degree of relationship of the bank’s responsible persons or staff in charge of credit extensions.
2.An enterprise in sole proprietorship or partnership invested by the bank’s responsible persons, staff in charge of credit extensions or by the interested parties prescribed in the preceding subparagraph.
3.An enterprise whose more than ten percent (10%) of its total outstanding shares or capital is solely or collectively held by the bank’s responsible persons, staff in charge of credit extensions or the interested parties prescribed in Subparagraph 1.
4.An enterprise whose director, supervisor or manager is the bank’s responsible person, the staff in charge of credit extensions or the interested party prescribed in Subparagraph 1 of, except where the concurrent positions of the director, supervisor, or manager arise from an investment relationship and has been approved by the central competent authority.
5.A juridical person or other organization whose representative or administrator is the bank’s responsible person, staff in charge of credit extensions or an interested party prescribed in Subparagraph 1. |
| Article 33- 2 |
（Prohibitions on mutual credit extensions between main personnel of banks）A bank shall not mutually extend unsecured credits to the responsible person or major shareholder of its corresponding bank or to an enterprise whose responsible person is the responsible person of the corresponding bank. The secured credits thereof shall be handled in accordance with Article 33. |
| Article 33- 3 |
（Restrictions on Transactions with the Same Person, the Same Concerned Party or the Same Affiliate）The competent authority may impose restrictions on credit extensions or other transactions by a bank with the same person, the same related party or the same affiliate. Regulations governing their amount limits, the scope of other transactions, and other matters to be complied with shall be prescribed by the competent authority.
The same person, same related party or the same affiliate with which a bank may extend credits or engage in other transactions as referred to in the preceding paragraph shall be as follows:
1. The same person shall refer to the same natural or juridical person.
2. The same related party shall refer to the principal, their spouse and relatives by blood within the second degree of kinship, and enterprises whose responsible persons are the principal or their spouse.
3. The same affiliates shall be defined under Articles 369-1 to 369-3, 369-9 and 369-11 of the Company Act. |
| Article 33- 4 |
（Applicability of credit extension applications made in the name of other persons）The foregoing provisions shall apply to where persons falling within Articles 32, 33 or 33-2 use other persons' names to apply for credit extensions from the bank.
Where the proceeds of a credit extension applied from a bank are used by a person who uses other persons' names or transferred to such person who uses other persons' names, the credit extension shall be deemed as extended to persons who use other persons’ names as referred to in the preceding paragraph. |
| Article 33- 5 |
（Subordinate companies）In determining whether a bank holds more than three percent (3%) or five percent (5%) of the paid-in capital of an enterprise for purposes of Article 32-1, Paragraph 1 and Article 33, Paragraph 1, the following amount of capital shall be included:
1.The amount of capital held singly or collectively by the bank's subsidiaries;
2.The amount of capital held by a third party on behalf of the bank; and
3.The amount of capital held by a third party on behalf of the bank's subsidiaries.
The scope of the bank's subsidiaries prescribed in the preceding paragraph shall apply the definition of Article 369-2, Paragraph 1 of the Company Act. |
| Article 34 |
（Restrictions on Method of Soliciting Deposits）A bank shall not offer allowances, gifts or other payments in addition to interest to accept deposits, except where it provides dividends for trust funds pursuant to the agreements. |
| Article 34- 1 |
（Reasonable pricing required for credit extensions by banks）A bank that extends credit shall set reasonable prices in consideration of factors such as market rates, its own funding costs, operating costs, expected risks and losses and customer's overall contribution and shall not solicit or conduct credit extension businesses by offering unreasonable prices. |
| Article 35 |
（Prohibition on the acceptance of improper benefits by bank clerks）The responsible persons and staff of a bank shall not accept, in any name, commissions, rebates or other unwarranted benefits from depositors, borrowers or other customers. |
| Article 35- 1 |
（Non-compete clause）The responsible persons and staff of a bank shall not hold concurrent positions in other banks, except where they may concurrently serve as the director or supervisor of an invested bank arising from an investment relationship and approved by the central competent authority. |
| Article 35- 2 |
（Qualifications of a responsible person of a bank）The guidelines for qualification requirements for the responsible persons of a bank, restrictions on concurrent positions thereof, prohibition of conflicts of interest and other matters to be complied with shall be prescribed by the competent authority.
Where a responsible person of a bank does not meet the qualification requirements prescribed in the guidelines referred to in the preceding paragraph, the competent authority shall discharge their position; where they violate the restrictions on concurrent positions and the prohibition of conflicts of interest, the competent authority may order the bank to make adjustment within a prescribed period of time and discharge the responsible person when the bank fails to make adjustment within the prescribed period without justified reason. |
| Article 36 |
（Supervision of assets and liabilities）The central competent authority may, when necessary, impose appropriate restrictions on the extension of unsecured loans or guarantees by banks after consultation with the Central Bank of the Republic of China.
The central competent authority may, when necessary, set the standard for the ratio of a bank's major assets to major liabilities and major liabilities to net worth after consultation with the Central Bank of the Republic of China. The competent authority shall punish the bank whose actual ratio does not meet the prescribed standard pursuant to the relevant provisions and may restrict its distribution of profits.
The terms "major asset" and "major liability" as used in the preceding paragraph shall be defined by the central competent authority taking into consideration the business nature of different types of banks. |
| Article 37 |
（Regulations for determining the value of collateral and maximum loan interest rate）The value of the pledged or mortgaged property provided by a borrower shall be accurately determined by banks based on their current price, deprecation rate, and marketability.
The Central Bank of the Republic of China, when necessary, may select several types of pledged or mortgaged property and impose their maximum lending rates to control credit. |
| Article 38 |
（Loans for the purchase of houses or buildings）A bank may extend medium- or long-term loans for the purchase or construction of residential or business constructions, and the maximum term of such loans shall not exceed thirty (30) years, except for the loans extended to persons who have no self-use housing for their purchase of self-use housing. |
| Article 39 |
（Medium-Term Loans or Discount Notes）A bank may extend medium-term loans to individuals for their purchase of durable consumer goods or discount promissory notes issued by a buyer as endorsed by a distributor. |
| Article 40 |
（Applicability of Procedure for Repayment in Installments Used in Medium-or Long-Term Loans）In extending the loans referred to in the preceding two articles, the procedure for repayment in instalments used in medium- or long-term loans may be applied. The Central Bank of the Republic of China may, when necessary, regulate and control the terms and credit duration of their repayment. |
| Article 41 |
（Bank interest rate）A bank's interest rates shall be in annual rate and posted in the bank's place of business. |
| Article 42 |
（Deposit and debt reserve ratio）A bank shall provide reserves for different types of deposits and other types of liabilities in accordance with the ratios prescribed by the Central Bank of the Republic of China.
The scope of the "other types of liabilities" in the preceding paragraph shall be prescribed by the Central Bank of the Republic of China in consultation with the competent authority. |
| Article 42- 1 |
Deleted. |
| Article 43 |
（Minimum standards for liquid asset and debt ratio）To assure that a bank maintains appropriate liquidity for its assets, the Central Bank of the Republic of China may, after consultation with the central competent authority, prescribe a minimum ratio between the bank’s current assets and various liabilities from time to time. The central competent authority shall notify the bank which fails to comply with the minimum ratio to make due adjustment within a prescribed period of time. |
| Article 44 |
（Ratio of regulatory capital to risk assets）The ratio between a bank's equity capital to its risk assets shall not be less than the prescribed ratio. The same applies to the ratio between consolidated equity capital to risk assets of the bank which are required by the competent authority to produce consolidated financial statements.
A bank shall be graded by capital as follows based on the ratio of its equity capital to risk assets:
1. Adequate capital.
2. Inadequate capital.
3. Significantly inadequate capital.
4. Seriously inadequate capital.
The term "seriously inadequate capital" in Subparagraph 4 of the preceding paragraph shall refer to the ratio of equity capital to risk assets being less than two percent (2%). A bank whose ratio of net-worth to total assets is less than two percent (2%) shall be deemed as having seriously inadequate capital.
The regulations governing the definition of "prescribed ratio" as referred to in Paragraph 1, the scope of a bank's equity capital and risk assets, method of calculation, and the classification and review for grading in Paragraph 2 shall be prescribed by the competent authority. |
| Article 44- 1 |
（Restrictions on distribution of earnings in cash or repurchase of shares）A bank having any of the following situations shall not distribute profits in cash or repurchase its shares:
1. The bank is graded as having inadequate capital, significantly inadequate capital or seriously inadequate capital.
2. The bank is graded as having adequate capital, but the bank is likely to be downgraded to any of the grades prescribed in the preceding subparagraph if it distributes profits in cash or repurchase its shares.
A bank referred to in Subparagraph 1 of the preceding paragraph shall not make payments other than remunerations to its responsible persons, unless it is otherwise approved by the competent authority. |
| Article 44- 2 |
（Measures for banks’ capital ratings）The competent authority shall take the following actions in part or in whole based on the grading of a bank's capital:
1. A bank having inadequate capital:
(1) Order the bank or its responsible persons to propose a capital restructuring or other finance and business improvement plans within a prescribed period. For a bank that fails to propose a capital restructuring or finance and business improvement plans per the order or fails to perform the said plan accordingly, supervisory actions for the next capital grade may be adopted.
(2) Restrict the new acquisition of risk assets or take other necessary actions.
2. A bank having significantly inadequate capital:
(1) Apply the provisions in the preceding paragraph.
(2) Discharge the responsible persons from their positions and notify the competent authority in charge of company registration to take note thereof on the registered items.
(3) Order the bank to obtain the prior approval of the competent authority before acquiring or disposing of specific assets.
(4) Order the bank to dispose of specific assets.
(5) Restrict or prohibit credit extension or other transactions with interested parties.
(6) Restrict the investment activities or some businesses of the bank or order the bank to close a branch or department within a prescribed period.
(7) Limit the deposit rate to a level not exceeding the interest rate other banks pay on comparable deposits or deposits of the same nature.
(8) Order the reduction of the remuneration of responsible persons, and the reduced remuneration shall not exceed 70% of the average remuneration paid out to the said responsible persons within twelve (12) months before the bank's capital becomes significantly inadequate.
(9) Assign officials to supervise or take other necessary actions.
3. A bank having seriously inadequate capital: The competent authority shall take actions prescribed in Paragraph 2 of Article 62 of this Act in addition to the actions prescribed in the preceding subparagraph.
The competent authority may examine at any time the implementation status of the bank's capital restructuring or finance and business improvement plan. When necessary, it may consult with relevant authorities or institutions and entrust a professional institution to provide assistance at the cost of the bank.
Where a bank is under the supervision of an official assigned by the competent authority, Paragraph 3 of Article 62-2 of this Act shall apply mutatis mutandis.
Where a bank's business operation is seriously unsound or its capital grade is likely to be downgraded, the competent authority may adopt supervisory actions for the next capital grade. Where there is a likelihood of imminent danger to the bank's continuing operation or adverse effect on the financial stability, the competent authority shall renew the review or adjust the bank's capital grade.
The regulations governing the supervisory procedure in Paragraph 1, the duty and authority of the supervisor, the allocation of related expenses and other matters to be complied with shall be prescribed by the competent authority. |
| Article 45 |
（Inspection right of the central competent authority）The central competent authority may, at any time, appoint a designee, entrust an appropriate institution or direct a local competent authority to appoint a designee to examine the business, finance and other relevant affairs of a bank or related parties, or direct a bank or related parties to submit, within a prescribed period of time, authentic balance sheets, property inventories or other relevant documents and reports.
The central competent authority may, when necessary, appoint professionals and technologists to verify the matters, statements or materials subject to examination pursuant to the preceding paragraph, and such professionals and technologists shall, submit a report to the central competent authority based on the reality at the costs of the bank. |
| Article 45- 1 |
（Internal control and audit system）A bank shall establish an internal control and audit system. Regulations governing the objectives, principles, policies, operating procedures, qualification requirements for internal auditors, scope of internal control audits of mandated certified public accountants and other matters to be complied with shall be prescribed by the competent authority.
A bank shall establish an internal processing system and procedures with respect to the evaluation of asset quality, the provision of loss reserves, the clearing of non-performing loan collectibles and writing off of bad loans. Regulations governing the above shall be prescribed by the competent authority.
Where a bank entrusts its operation to another person, it shall establish internal operation systems and procedures for the scope of the entrusted matters, protection of customer rights and interests, risk management, and internal control principles. Regulations governing the above shall be prescribed by the competent authority.
Where a bank engages in financial derivatives businesses, it shall establish internal operating systems and procedures for the scope of businesses, personnel management, protection of customer rights and interests, and risk management. Regulations governing the above shall be prescribed by the competent authority. |
| Article 45- 2 |
A bank shall exercise the due care of a good administrator with respect to deposit accounts. Where a deposit account is suspected of illegality or obviously irregular transactions, a bank may temporarily suspend deposits, withdrawals, or outward remittances of funds.
Standards for determining suspected illegality or obviously irregular transactions accounts in the preceding paragraph and operational procedures and regulations for temporary account suspension shall be prescribed by the competent authority. |
| Article 46 |
（Deposit insurance organization）To protect depositors’ interests, a deposit insurance organization may be formed by the government or banks. |
| Article 47 |
（Formation of an Interbank Organization）To mutually provide liquidity and reserves and increase the efficiency of monetary credit, banks may stipulate charters to form interbank lending organizations. |
| Article 47- 1 |
（Approval to Engage in Monetary Market or Credit Card Business; Caps for Cash Card Interest Rate or Revolving Interest Rate for Credit Cards）An institution engaging in a money market or credit card business shall obtain the approval of the central competent authority. Its administration rules shall be prescribed by the central competent authority after consultation with the Central Bank of the Republic of China.
Starting September 1, 2015, the interest rate charged by a bank on cash cards or the interest rate charged by a credit card business institution on the revolving credits of credit cards shall not exceed fifteen percent (15%) per annum. |
| Article 47- 2 |
（Regulations applying mutatis mutandis to Monetary Market Service Providers）Articles 4, 32 to 33-4, 35 to 35-2, 36, 45, 45-1, 49 to 51, 58 to 62-9, 64 to Article 69 and 76 shall apply mutatis mutandis to institutions engaging in money market businesses. |
| Article 47- 3 |
（Approval and management of financial information service businesses）A financial information service business engaging in fund transfers and account clearings between financial institutions shall obtain the competent authority's approval. The business involving large-sum fund transfer and account clearings shall obtain the approval of the Central Bank of the Republic of China. Regulations governing its approval and administration shall be prescribed by the competent authority after consultation with the Central Bank of the Republic of China.
A service business engaging in credit information handling and exchange between financial institutions shall obtain the competent authority’s approval. Regulations governing their approval and administration shall be prescribed by the competent authority. |
| Article 48 |
（Banking Secrecy ）A bank may not accept requests from a third party to suspend payment on deposits or remittances, detain the security, or articles in custody or other similar requests, unless in accordance with a court judgment or provisions of other laws.
A bank shall keep confidential the deposit, loan, remittance, or other information of its customers unless under any of the following circumstances:
1. Otherwise provided by laws.
2. The write-off bad debt information of the same customer whose non-performing debts have been written off and the cumulative amount of write-off bad debts exceeds fifty million New Taiwan Dollars (NT$50,000,000), or whose cumulative amount of write-off bad debt of the same customer within half a year after the loan was made exceeds thirty million New Taiwan Dollars (NT$30,000,000).
3. The information on non-performing loans or non-accrual loans related to cases prosecuted by prosecutors pursuant to Articles 125-2, 125-3, or127-1.
4. Other circumstances prescribed by the competent authority. |
| Article 49 |
（Statement formulation, publication, and certification）At the end of each business year, a bank shall prepare its annual reports and report its business report, financial statements, resolution on profit distribution or loss appointment and other items prescribed by the competent authority to the competent authority and the Central Bank of the Republic of China respectively, for recordation, within fifteen (15) days after such reports are ratified by their shareholders' meeting or, if there is no shareholders' meeting, within fifteen (15) days after such reports are approved by their board of directors. Matters to be included in the annual report shall be prescribed by the competent authority.
In addition to publishing its financial statements and other items prescribed by the competent authority in a daily newspaper in the bank’s located place or in the manner prescribed by the competent authority, a bank shall also place them in a conspicuous place in each of its business premises for review; provided that a bank may be exempted from publishing them if it complies with Article 36 of the Securities and Exchange Act.
The statements and items required to be published under the preceding paragraph shall be audited and certified by a certified public accountant. |
| Article 50 |
（Appropriation of statutory earnings reserve）A bank, before distributing its after-tax profits, shall set aside thirty percent (30%) of them as a legal reserve. Before the amount accumulated reaches that of the bank's paid-in capital, the maximum profit distribution in cash shall not exceed fifteen percent (15%) of the bank's paid-in capital.
Where the amount of a bank’s legal reserve reaches that of a bank's paid-in capital or the bank is sound in finance and business and has set aside legal reserve in compliance with the Company Act, the restrictions prescribed in the preceding paragraph shall not apply.
In addition to the legal reserve, a bank may set aside a special reserve in accordance with its Articles of Incorporation or a resolution of its shareholders’ meeting.
Standards governing the capital adequacy ratio, asset quality, and compliance required for being sound in finance and business prescribed in Paragraph 2 shall be prescribed by the competent authority. |
| Article 51 |
（Bank business hours and holidays）The business hours and holidays of banks may be prescribed and publicly announced by the central competent authority. |
| Article 51- 1 |
（Appropriation and usage of funds for cultivating professional talents）To develop financial professionals, a bank shall allocate funds exclusively for use in the development of financial studies and trainings. Methods for fund allocation and principles for the use and management shall be drafted by the Bankers Association of the Republic of China and approved by the competent authority. |
| Article 51- 2 |
（International Cooperation）To promote international cooperation between the competent financial authorities of the Republic of China and other countries, the government or its delegated institutions may, based on the principle of reciprocity, enter into a cooperation treaties, protocols, or agreements with foreign governments or institutions or international organizations on matters such as information exchange, technical cooperation, and investigation assistance.
Unless in conflict with the national or public interests, the competent authority may, in accordance with the treaty, protocol, or agreement entered into pursuant to the preceding paragraph, request the provision of necessary information from related authorities and institutions in accordance with laws and, based on the principles of reciprocity and confidentiality, provide such information to the foreign government, institution or international organization which has entered into the treaty, protocol, or agreement with the Republic of China. |