The legislature yesterday requested that state-run banks take the initiative in lowering interest rates on revolving credit to reflect the central bank’s series of rate cuts over the past few months.
Chinese Nationalist Party (KMT) Legislator Lu Shiow-yen (盧秀燕), who sits on the Finance Committee, said yesterday that state-run banks — with the exception of Bank of Taiwan (臺灣銀行) — had been charging unreasonably high interest rates on credit card owners who use revolving credit.
“State-run banks, in particular, shouldn’t have granted such loans that rip people off,” she said.
She said Hua Nan Commercial Bank (華南銀行) had the highest revolving rate, at between 8.61 percent and 20 percent, followed by First Bank’s (第一銀行) 18.25 percent single rate for all revolving credit and Mega International Commercial Bank (兆豐國際商銀) at between 4.98 percent and 19.71 percent.
Changhwa Bank (彰化銀行) charges between 8.63 percent and 18.25 percent, Taiwan Cooperative Bank (合作金庫銀行) charges between 5.65 percent and 18 percent, Taiwan Business Bank (台灣企銀) between 5.99 percent and 17.99 percent, while Land Bank (土地銀行) charges between 4.99 percent and 17.99 percent.
The committee passed a resolution urging all state-run banks to cut their rates.
The private banking sector, however, said the government should not intervene, as such rates reflected the banks’ operating costs.
Chinatrust Commercial Bank (中國信託商銀) president Luo Lian-fu (羅聯福) said yesterday that no advanced countries put a cap on such rates because they varied in accordance with a borrowers’ credit risk, adding that any further cuts in the highest rate would force banks to reject loan applications, which could compel people to turn to “underground” lenders.
If the top interest rate were lowered from 20 percent to 15 percent, domestic banks could pull out of that segment of the credit business altogether, which is worth approximately NT$27 billion (US$790.2 million). High-risk borrowers desperate for money, meanwhile, could turn to underground creditors, who often charge 30 percent interest, he said.
“Is this what the government wants?” he asked.
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