In response to the pandemic of COVID-19, the Financial Supervisory Commission (the FSC) has asked banks to follow the instructions from the Central Epidemic Command Center (CECC). Bank have supported the government's economic relief measures and acted as quickly as possible to support the special relief programs adopted by various Cabinet agencies to facilitate rapid processing of paperwork, and by instituting electronic procedures to improve efficiency. It is expected to minimize the adverse impacts on the industries with the efforts by the banks.
1. Background:
The Articles 11 and 19 of the Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens has been effective since May 31, 2021. The government has worked to control COVID-19 and protect people's health while assisting businesses and individuals in need. The special act has been extended another year to June 30, 2022, with the special budget ceiling raised to NT$840 billion (US$30.3 billion).
The Bureau has invited financial institutions to support the relief measures proposed by various ministries in accordance with the "Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens," including the rescheduling of existing corporate loans, provision of working capital loans and interest subsidies for stimulus loans, and provision of loan guarantees by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan to assist industry in overcoming difficulties, and to help stabilize the industrial economy.
2.The pandemic prevention measures
The FSC has adopted the following measures to enforce the pandemic prevention and to facilitate the financial institution business continuity：
(1) Since 2021 May 20, the CECC announced the national Level 3 COVID-19 alert. The fees for account transfer on-line have been waived, and the fees for those via physical ATM have deduced by TWD 2 dollars. The FSC has encouraged on-line financial transactions to avoid face-to-face transactions.
(2) The banks could offer alternative financial products and services with flexibilities to decrease the staffs’ off-site visits and clients’ counter transactions. For those in-person transactions with timely documents, the banks could adopt alternative solutions after proper authorization. Meanwhile, the banks should set up the revised mechanism (such as transaction reviews and verification process) to make sure the transaction authentication. In compliance with the above principles, the banks will not receive examination comments.
(3) Given employee safety and client rights and interests, each financial institution can apply to adjust business schedules and service types conducted in physical presence with flexibilities each day accordingly.
(4) During the pandemic outbreak, the banks should decrease or stop off-site visits by employees. Furthermore, the banks should revise the business objectives and performance evaluation criteria for staffs not to take higher health risks due to sales pressures.
(5) The head offices of banks should provide their employees vital assistances and protection measures with proper human power allocations, sufficient supplies and correct guidelines.
2. Relief measures
(1) Enterprises: The FSC is stepping up efforts to provide enhanced relief and stimulus measures to prevent financial institutions from withdrawing their help in times of need.
a. Not withdrawing help in times of need: If the original loan principal expires before June 30, 2021 and payments need to be rescheduled, the bank may agree to defer the loan for 6 months if the borrowing company applies for deferral.
b. Lower threshold for corporate debt workouts: In the past, a corporate debt workout procedure would only be initiated if creditors holding at least two-thirds of all creditor claims agreed to it. This threshold has now been reduced to creditors holding at least one-half of all creditor claims, and the deadline for application has been extended to the end of December 2021.
c. Guarantee conditions for the rescheduling of existing loans: In principle, banks are not to require borrowers to furnish a certificate of deposit as collateral, nor are they to require anyone other than a company's responsible person or actual person in charge to act as a guarantor.
d. Expedited handling of loan applications: Banks have been given time limits for completing the rescheduling of existing loans and provision of new loans.
(a) The rescheduling of old loans must in principle be completed within 2 weeks.
(b) New loans of less than NT$5 million: Approval must be granted within 10 business days for working capital loans and 15 business days for stimulus loans.
(c) New loans of less than NT$1 million: Approval must be granted within 7 business days.
e. The FSC promotes streamlining of small business entity loan applications: For small business entities to apply for loans of less than NT$500,000, the use of a simple credit scoring table has been proposed to simplify banks' loan approval process. For small business entities with a credit score above a certain level, the Small and Medium Enterprise Credit Guarantee Fund of Taiwan can make an immediate underwriting decision on a 100% credit guarantee with an interest rate not exceeding 1%, which will help members of the public obtain needed funds quickly. The program was launched on April 20, 2020.
(2) Debt workouts for individual borrowers:
To encourage banks to provide assistance to customers experiencing loan repayment difficulties due to the COVID-19 pandemic, the FSC invited the ROC Bankers Association and some of its member banks to a meeting to discuss a debt workout mechanism for individual borrowers. This debt workout mechanism includes the following measures:
a. credit card holders are allowed to apply for a deferral of 3 to 6 months on the repayment of outstanding credit card debts, and during the deferral period banks will not charge default penalties or additional revolving interest; and other persons having difficulties repaying principal and/or interest may apply for a rescheduling of 3 to 6 months, during which time they will not be charged default penalties or default interest.
b. The debt workout mechanism has been extended from June 30 to Dec. 31, 2021.
c. During the period of a loan deferral or loan rescheduling, under the terms of the debt workout agreement, the debtor is not required to repay principal or interest. Until the obligation comes due it will not be treated as a bad debt, and an instance of late payment will not be included in the debtor's credit record.
3. Measures to encourage financial institutions:
The FSC has adopted the "Program For Encouraging Domestic Banks to Expedite Processing Relief and Stimulus Loans" to encourage banks to process loan applications efficiently. The rewards -- which are granted on the basis of three types of lending performance, namely: "lending amount," "number of loans," and "efficiency" -- are granted to commend banks that perform well in these areas. Domestic banks were informed of this reward program on April 9, 2020, and have been asked to actively cooperate and formulate incentive measures for branches and employees.
1. Background:
The Articles 11 and 19 of the Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens has been effective since May 31, 2021. The government has worked to control COVID-19 and protect people's health while assisting businesses and individuals in need. The special act has been extended another year to June 30, 2022, with the special budget ceiling raised to NT$840 billion (US$30.3 billion).
The Bureau has invited financial institutions to support the relief measures proposed by various ministries in accordance with the "Special Act for Prevention, Relief and Revitalization Measures for Severe Pneumonia with Novel Pathogens," including the rescheduling of existing corporate loans, provision of working capital loans and interest subsidies for stimulus loans, and provision of loan guarantees by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan to assist industry in overcoming difficulties, and to help stabilize the industrial economy.
2.The pandemic prevention measures
The FSC has adopted the following measures to enforce the pandemic prevention and to facilitate the financial institution business continuity：
(1) Since 2021 May 20, the CECC announced the national Level 3 COVID-19 alert. The fees for account transfer on-line have been waived, and the fees for those via physical ATM have deduced by TWD 2 dollars. The FSC has encouraged on-line financial transactions to avoid face-to-face transactions.
(2) The banks could offer alternative financial products and services with flexibilities to decrease the staffs’ off-site visits and clients’ counter transactions. For those in-person transactions with timely documents, the banks could adopt alternative solutions after proper authorization. Meanwhile, the banks should set up the revised mechanism (such as transaction reviews and verification process) to make sure the transaction authentication. In compliance with the above principles, the banks will not receive examination comments.
(3) Given employee safety and client rights and interests, each financial institution can apply to adjust business schedules and service types conducted in physical presence with flexibilities each day accordingly.
(4) During the pandemic outbreak, the banks should decrease or stop off-site visits by employees. Furthermore, the banks should revise the business objectives and performance evaluation criteria for staffs not to take higher health risks due to sales pressures.
(5) The head offices of banks should provide their employees vital assistances and protection measures with proper human power allocations, sufficient supplies and correct guidelines.
2. Relief measures
(1) Enterprises: The FSC is stepping up efforts to provide enhanced relief and stimulus measures to prevent financial institutions from withdrawing their help in times of need.
a. Not withdrawing help in times of need: If the original loan principal expires before June 30, 2021 and payments need to be rescheduled, the bank may agree to defer the loan for 6 months if the borrowing company applies for deferral.
b. Lower threshold for corporate debt workouts: In the past, a corporate debt workout procedure would only be initiated if creditors holding at least two-thirds of all creditor claims agreed to it. This threshold has now been reduced to creditors holding at least one-half of all creditor claims, and the deadline for application has been extended to the end of December 2021.
c. Guarantee conditions for the rescheduling of existing loans: In principle, banks are not to require borrowers to furnish a certificate of deposit as collateral, nor are they to require anyone other than a company's responsible person or actual person in charge to act as a guarantor.
d. Expedited handling of loan applications: Banks have been given time limits for completing the rescheduling of existing loans and provision of new loans.
(a) The rescheduling of old loans must in principle be completed within 2 weeks.
(b) New loans of less than NT$5 million: Approval must be granted within 10 business days for working capital loans and 15 business days for stimulus loans.
(c) New loans of less than NT$1 million: Approval must be granted within 7 business days.
e. The FSC promotes streamlining of small business entity loan applications: For small business entities to apply for loans of less than NT$500,000, the use of a simple credit scoring table has been proposed to simplify banks' loan approval process. For small business entities with a credit score above a certain level, the Small and Medium Enterprise Credit Guarantee Fund of Taiwan can make an immediate underwriting decision on a 100% credit guarantee with an interest rate not exceeding 1%, which will help members of the public obtain needed funds quickly. The program was launched on April 20, 2020.
(2) Debt workouts for individual borrowers:
To encourage banks to provide assistance to customers experiencing loan repayment difficulties due to the COVID-19 pandemic, the FSC invited the ROC Bankers Association and some of its member banks to a meeting to discuss a debt workout mechanism for individual borrowers. This debt workout mechanism includes the following measures:
a. credit card holders are allowed to apply for a deferral of 3 to 6 months on the repayment of outstanding credit card debts, and during the deferral period banks will not charge default penalties or additional revolving interest; and other persons having difficulties repaying principal and/or interest may apply for a rescheduling of 3 to 6 months, during which time they will not be charged default penalties or default interest.
b. The debt workout mechanism has been extended from June 30 to Dec. 31, 2021.
c. During the period of a loan deferral or loan rescheduling, under the terms of the debt workout agreement, the debtor is not required to repay principal or interest. Until the obligation comes due it will not be treated as a bad debt, and an instance of late payment will not be included in the debtor's credit record.
3. Measures to encourage financial institutions:
The FSC has adopted the "Program For Encouraging Domestic Banks to Expedite Processing Relief and Stimulus Loans" to encourage banks to process loan applications efficiently. The rewards -- which are granted on the basis of three types of lending performance, namely: "lending amount," "number of loans," and "efficiency" -- are granted to commend banks that perform well in these areas. Domestic banks were informed of this reward program on April 9, 2020, and have been asked to actively cooperate and formulate incentive measures for branches and employees.
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Update：
2021-06-04