Many have commented recently that the handling fees charged by domestic banks for relief and stimulus loans should be commensurate with the relief purpose of the loans, and should be in line with the principle of proportionality. In response, the FSC has comprehensively investigated how domestic banks charge fees for handling such loans,and found that banks charge in one of three ways: no fees, flat fees, and proportional fees based on the approved loan amount. The FSC has recommended that the handling fee should not exceed NT$10,000 in the future.

 

In principle, a bank sets its loan fees according to the market mechanism. However, for relief loans provided under the auspices of a government program to help enterprises withstand the impact of the epidemic, the government has provided interest subsidies and collaborated with the SME Credit Guarantee Fund of Taiwan to provide credit guarantees, assist enterprises to operate normally, and maintain the quality of bank assets. Therefore, it is advisable for the bank to consider the purpose of the loan -- which is to provide relief -- and to uphold the principles of fairness, reasonableness, and proportionality when collecting handling fees. Also, it is not advisable to view the charging of fees as a way of making up for the low interest rate of relief loans, because this approach undercuts the original purpose of such loans, which is to assist individuals and enterprises by providing low interest rates.

 

For the above reasons, the FSC recommends that the principles of banks charging for relief loans should be as follows:

1. For loans of NT$10 million or less, total fees must not in principle exceed NT$10,000 regardless whether the fees are charged on a flat fee basis or as a percentage of the approved loan amount.

2. For loans of more than NT$10 million, total fees must meet the principle of proportionality regardless whether the fees are charged on a flat fee basis or as a percentage of the approved loan amount.

3. If a bank''s original fee standards were more advantageous to borrowers than the principles described above, then the bank must abide by its original fee standards.

4. Scope: Relief and stimulus loans for enterprises and individuals that banks provide to support the policies of various ministries, and the Central Bank''s accommodations to banks.

5. Period: From now until June 30, 2021.

6. After expiration of the program: Fees shall be charged in line with general principles for loan fees, and shall adhere to the principles of fairness, transparency, and proportionality.

7. For relief loans for which the fees charged do not meet the aforementioned principles, it is advisable for the bank to refund the excessive portion or take some other action to make the customer whole.

8. For corporate and personal relief loans that banks provide independently (without acting under the auspice of any government program), fees can be handled in accordance with the above principles.

 

The FSC explained these loan fee principles at a meeting held on May 12, 2020. All banks present agreed to cooperate with the suggested fee reduction measures. The FSC also affirmed the efforts made by banks to cooperate with relief measures during the relief period.