The worldwide spread of COVID-19 has severely impacted the economies of countries all over the world. Taiwanese industries that play an important role in global supply chains have also been affected due to the impact of the epidemic on other countries. In response to the severe impact of the epidemic on economic development, the FSC has urged financial institutions to fully implement 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 stimulus loans, and provision of loan guarantees by the Small and Medium Enterprise Credit Guarantee Fund of Taiwan to help businesses overcome difficulties, and to stabilize the industrial economy.

 

In addition to granting relief loans to corporate borrowers as called for under the economic stimulus programs of central government agencies, the FSC is also pushing for banks to take the following measures for corporate and individual borrowers affected by COVID-19:

1. Corporate loans: The FSC is overseeing an effort by the ROC Bankers Association (BAROC) to prompt banks to step up the provision of relief loans and not turn their backs on borrowers in their hour of need. In particular, BAROC is pushing for its member institutions to defer repayment of loan principal until the end of December 2021.

2. Personal loans: Individuals who are having trouble with repayment of loans due to COVID-19 are allowed to apply for 3- to 6-month deferrals of principal or interest payments, and default penalties and default interest may be waived during the deferral period. During the period of a loan deferral or loan rescheduling, 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. Faster processing of relief loan applications: Processing of applications for rescheduling of outstanding loans can in principle be completed in two weeks, while applications for new loans of NT$5 million or less can be approved within 10 working days in the case of working capital loans, or within 15 working days in the case of relief loans, and applications for new loans of NT$1 million or less can in principle be approved within 7 working days.

4. Push for banks to reflect Central Bank rate cuts in their own lending rates: In addition to lowering lending rates by 0.25 percentage points across the board, 20 private-sector banks have also followed the lead of government-owned banks by cutting lending rates by 0.5 percentage points for owner-occupied home loans to individuals affected by COVID-19, and 19 private-sector banks have cut lending rates by 0.75 percentage points for credit card debts, unsecured loans, and auto loans.

 

As of April 15, 2020, banks had accepted a total of 20,258 applications for relief loans (either doing so under various government programs, or undertaking relief lending on their own initiative). The applications were submitted by both businesses and individuals, and the total approved amount was NT$251.1 billion. A total of 13,473 applications were approved for a total combined loan amount of NT$130.5 billion. By loan amount, the approval ratio was 52%, and by the share of total applications, the approval ratio was 67%. In addition, 5,443 credit card holders were allowed to apply to reschedule principal or interest payments for 3 to 6 months, and payment of liquidated damages and default interest was waived during the deferral period. The number of these loans is still increasing. The FSC has also launched the "Program For Encouraging Domestic Banks to Expedite Processing of Relief and Stimulus Loans" to reward domestic banks that perform well in speeding up the provision relief and stimulus loans, and to encourage banks to demonstrate professionalism and efficiency. 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. In addition, top performing banks receive favorable regulatory treatment when, for example, applying for permits to engage in specific lines of business. Banks, in turn, have been asked to reward their top performing branches.

 

In order to speed up the approval of relief loans to small business entities, the FSC will promote the use of simplified loan approval score sheets in place of financial statements or 401 statements to review applications for loans of less than NT$500,000. This approach is expected to be used with the loan applications of about 85% of small business entities. To achieve the purpose of rapid approval, there will be no requirement to submit complicated application documents. The loan funds are supported by the Central Bank''s reaccommodation program. The current annual interest rate is 1% and the application period is from April 1, 2020 to March 27, 2021.

 

The FSC is grateful to banks for reducing interest rates and providing debt workout measures to help borrowers get through the epidemic. It is hoped that during this period banks can quickly respond to the needs of customers, maintain stable operations despite rapidly changing economic conditions, and demonstrate the professionalism and effectiveness of our banking industry.