Fri, Jan 23, 2009 - Page 11 News List

FSC tells banks to refrain from tightening lending

BOOKING LOSSES The commission said that most banks had agreed not to let a new accounting rule affect their willingness to extend credit to businesses

By Shih Hsiu-chuan  /  STAFF REPORTER

Financial Supervisory Commission Chairman Sean Chen, left, and Department of Commerce Director-General Wang Pai-por, talk about the implementation of a new accounting rule at a press conference in Taipei yesterday.

PHOTO: CHIEN JUNG-FONG, TAIPEI TIMES

The Financial Supervisory Commission yesterday called on banks to refrain from tightening loans to businesses following the implementation of a new accounting rule that could affect businesses* balance sheets.

Financial Supervisory Commission (FSC) Chairman Sean Chen (?喳) said yesterday that the commission had talked to banks about the implementation on Jan. 1 of the International Accounting Standard Statement No. 10, which includes a requirement that businesses book inventory losses on a quarterly rather than an annual basis.

Businesses had expressed concern that booking losses on a quarterly basis could reflect badly on their financial statements and affect banks* willingness to extend credit.

Although the government will not penalize banks if they do tighten credit controls, Chen told a press conference after the weekly Cabinet meeting that a majority of the banks had understood the need for banks to continue supporting businesses.

Asked if the new accounting rule would also affect booking of idle equipment writeoffs, Chen said: ※It is the economic downturn 〞 not the rule 〞 that is driving down inventory prices.§

The commission said on Tuesday that the new accounting rule only requires companies to list idle equipment as operating costs, but makes no mention of when and how often they should file such costs.

The Cabinet yesterday agreed that businesses can book the writeoffs on idle equipment at the end of the year.

It also approved an amendment to the Company Act (鼠侗楊), which proposed lifting the minimum capital requirement in establishing a corporation.

Wang Pai-por (卼窫疏), the director general of the Department of Commerce, said that scrapping the capital requirement of NT$500,000 (US$15,000) to set up a limited company and NT$250,000 for an incorporated limited company could be a boost to business sentiment.

Taiwan ranked low on ease of doing business by the World Bank because of those restrictions, Wang said, adding that the revision could help the country move up the list.

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