The Financial Supervisory Commission (FSC) yesterday set banks a record lending target to small and medium-sized businesses of NT$240 billion (US$7.98 billion), despite uncertainty caused by the tapering of US quantitative easing.
The financial regulator announced the target after a meeting with top banking executives. It was a show of support for small and medium-sized companies, as lenders tend to tighten lines of credit in times of volatility.
While seeking to achieve the goal, banks should nevertheless exercise due caution, diversify their risk, and disclose details in line with accountability and transparency requirements, the commission said.
The FSC specifically asked banks to reveal the extent of their exposure to China, where reports of loan defaults are escalating.
The regulator also urged local lenders to use fair interest rates when they carry out inter-bank lending, after several international banks were caught profiting through rigging borrowing rates.
The FSC reiterated concerns over underpricing practices among financial institutions, saying vicious competition is unfavorable for the nation’s financial stability.
Separately, the commission approved plans by Financial Information Co (財金公司) to team up with local financial institutions and offer payment services in China and other nations via the China UnionPay Co (中國銀聯) network.
The new venture will not be available for local customers until after the cross-strait service trade agreement clears the legislature, the commission said.