Fri, Apr 01, 2016 - Page 13 News List

FSC unclear over legality of peer-to-peer lending

By Ted Chen  /  Staff reporter

The Financial Supervisory Commission (FSC) yesterday said that peer-to-peer (P2P) lending still has a murky legal status following a meeting with (鄉民貸), which last week debuted as one of the first companies in the nation to offer the service.

The commission reiterated its warning to the firm against breaching laws prohibiting unauthorized fundraising and receiving of deposits and urged the public to be wary of the service’s potential risks.

“The commission had an hour-long discussion with chief executive Tony Huang (黃智康) about the company’s operations,” Banking Bureau Director Wang Peng-i (王亨毅) said at a press conference.

In an effort to conform to guidelines, Huang sought a number of banks to establish trust accounts to handle funds from lenders participating on the platform, Wang said.

However, none of the banks were willing to be involved in P2P business, Wang said, adding that the bureau has no jurisdiction over the matter.

As another P2P lending company, Lend & Borrow (信用市集), started business earlier this month, Wang said the commission still holds a neutral stance over the new industry, meaning that the commission cannot ask banks to agree to let the P2P lenders make trust accounts if they are not interested in the business.

In related news, the commission said that amid slowing economic growth in Taiwan, local banks are likely to miss its NT$360 billion (US$11.2 billion) loan target for small and medium-sized enterprises (SME) this year.

Last year, domestic banks only extended NT$288.5 billion in SME loans, reaching 80 percent of the target for the period, the commission said.

As of the end of last month, accumulated loans to SMEs were NT$5.38 trillion, FSC data showed.

The NT$360 billion loan target was set last year, when the nation’s GDP growth was anticipated to reach 3.5 percent.

The commission said the target would be adjusted according to economic conditions this year.

With non-performing loans to SMEs rising 0.02 percent to 0.46 percent last month, the commission said it would keep encouraging banks to increase SME loans using sound risk management.

Total lending by the nation’s 39 domestic banks reached NT$25.43 trillion last year, falling NT$51.8 billion sequentially, commission data showed, with non-performing loans rising by NT$2.9 billion to NT$62.4 billion.

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