Data Source:Laws and Regulations Retrieving System of the Banking Bureau

Criteria for Transaction Limits Between Credit Cooperatives and its Non-members

1. Full 5 articles adopted and promulgated 14 October 2005 per Order No. Jin-Kuan-Yin-(III)-0930023277 of the Financial Supervisory Commission, Executive Yuan; to enter into force from the date of promulgation

Article 4 amended and promulgated 23 December 2005 per Order No. Jin-Kuan-Yin-(III)-09430018470 of the Financial Supervisory Commission, Executive Yuan

Article 1
The Criteria are adopted in accordance with Article 15, Paragraph 2, of the Credit Cooperatives Act.

Article 2
Business items in transactions between credit cooperatives and non-members are as follows:
1. Accepting deposits of all types.
2. Extending loans and overdrafts.
3. Providing domestic remittance services.
4. Providing collection and payment agency services.
5. Buying and selling foreign currency and travelers checks.
6. Providing custodial and agency services related to the above-listed items.
7. Other business approved by the central Competent Authority.

Article 3
The limits on transactions between credit cooperatives and non-members are as follows:
1. The aggregate balance of deposits by non-members accepted by a credit cooperative may not exceed 7 times its net worth.
2. The aggregate balance of credit extended to non-members by a credit cooperative may not exceed the aggregate amount of deposits by non-members.

Article 4
The scope of business, standards, and limits on credit that a credit cooperative may extend to non-members are as follows:
1. Where a credit cooperative's ratio of equity capital to risk-based capital is not lower than 8 percent at the end of the preceding year, it may extend housing loans using buildings located within its business territory or the neighboring two counties or county-level cities (or special municipality administered directly by the central government) as collateral; the aggregate loan amount may not exceed two times its net worth.
2. Extension of loans secured by certificates of deposit of the lending credit cooperative, short-term bills, government bonds, financial bonds, and secured corporate bonds as collateral. 　　　　
3. Extension of consumer loans of NT$1.5 million or less, provided that aggregate amount of the loans may not exceed the cooperative's net worth. "Consumer loan" means loans for home repair, durable consumer goods (including automobiles), tuition payments, and other small personal loans.
4. Extension of credit to government agencies and government-owned enterprises.

Where a credit cooperative's non-performing loan ratio for the preceding 12 months has been lower than 2 percent, it has duly allocated sufficient allowance for bad debt in accordance with regulations, and its ratio of allowance for bad debts to non-performing loans has uniformly been not lower than 40 percent, the provision in subparagraph 1 of the preceding paragraph regarding building location may be expanded to the neighboring three counties or county-level cities (or special municipality administered directly by the central government).

If after a credit cooperative extends a housing loan to a non-member in accordance with subparagraph 1 of paragraph 1, any non-compliance with the conditions listed in that subparagraph subsequently occurs, the credit cooperative shall immediately suspend that type of credit extension business. If non-compliance with a ratio set out in the preceding paragraph occurs, the credit cooperative may continue that type of credit extension business only in the neighboring two counties or county-level cities (or special municipality administered directly by the central government), provided that these restrictions do not apply where the loan approval process has already been completed but the funds have not been allocated. A credit cooperative may recommence that type of credit extension business only after it is in compliance with the listed conditions.

The provisions regarding limits on credit extensions by a credit cooperative to a same person or same related parties shall apply to credit extensions by a credit cooperative to non-members under subparagraphs 1 to 3 of paragraph 1. However, extensions of credit secured by collateral in the form of certificates of deposit of the lending credit cooperative or government bonds may be excluded when calculating the aggregate amount of loans to a same person or same related parties.

In extensions of credit to government-owned enterprises, a credit cooperative may only be a participating bank in a syndicated loan; it may not be the lead bank.

The aggregate amount of credit extended by a credit cooperative to non-members in credit extension business under subparagraph 4 of paragraph 1 is not included in calculation of the aggregate balance of credit extended to non-members under the limit provisions of the preceding article; provided, the aggregate balance of credit extended to government agencies may not exceed two times the net worth of the given credit cooperative after the final accounting for the preceding fiscal year, and the aggregate balance of credit extended to government-owned enterprises may not exceed the net worth of the given credit cooperative after the final accounting for the preceding fiscal year.

Article 5
These Criteria shall enter into force from the date of promulgation.