The bad-loan ratio at local banks fell in November, as the nation's lenders responded to government pressure to clean up their balance sheets.
The bad-loan ratio, including loans under supervision, dropped to 9.71 percent as of Nov. 30 from 9.97 percent a month earlier. That's equivalent to NT$1.36 trillion (US$39 billion) of troubled lending, the Ministry of Finance's Bureau of Monetary Affairs said in a statement.
Excluding loans classified as being at risk of default, the ratio fell to 6.81 percent of total lending. In the first 11 months, domestic lenders wrote off NT$343.9 billion in bad loans.
"The banks worked very hard to write off the bad loans last year," said Gary Tseng (
The ministry in October demanded lenders cut their NPL ratios to below five percent by the end of this year.
The ministry is seeking legislators' approval to increase a bad-loan clean-up fund to NT$1.05 trillion from NT$140 billion.
The fund was set up in 2001 to absorb bad loans at lenders. It has used up about NT$100 billion of the NT$140 billion.
Increasing the fund is "critical" to the government's effort to revamp an industry that has too many banks, Tseng said. Taiwan has 52 banks and more than 300 community credit associations.
The government hopes to receive legislators' approval in the next legislative session, Tseng said. A proposal to top up capital in troubled lenders is part of the cleanup.
Legislators are scheduled to convene for their next session on Feb. 25 after the Lunar New Year holiday.
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