Lawmakers yesterday criticized the capital requirement of NT$10 billion (US$323.35 million) for Web-only banks as being too high, but Financial Supervisory Commission (FSC) Chairman Wellington Koo (顧立雄) said the commission would not back down from the requirement.
The commission in April unveiled its Web-only bank regulations, which among others have required online lenders to have a minimum capital of NT$10 billion — the same as conventional banks.
At a meeting of the legislature’s Finance Committee yesterday, Democratic Progressive Party (DPP) Legislator Yu Wan-ju (余宛如) said that neighboring nations have set much lower capital requirements for Web-only banks, such as ￥2 billion (US$17.64 million) in Japan, 50 billion won (US$43.95 million) in South Korea and HK$300 million (US$38.31 million) in Hong Kong.
Urging the commission to reduce the capital requirement, Yu said that Taiwanese Web-only banks would have a difficult time raising funds and turning a profit due to the high requirement.
Koo, who had said that Web-only banks could make a profit within three years of starting operations, said that Japanese Web-only banks were allowed to conduct only partial banking services, while the proposed online banks in Taiwan would function as their conventional peers.
Koo said he is not planing to reduce the capital requirement, as raising NT$10 billion “would not be a problem” for consortiums interested in setting up Web-only banks.
Moreover, Web-only banks would cost as much as their conventional counterparts due to the same compliance regulations, Koo said, adding that a South Korean Web-only bank has increased its capital this year.
Koo also said he is considering a new kind of conventional bank that can apply for lower capital requirement if it does not accept deposits.
As some technology companies are applying to conduct financial experiments within the government’s regulatory sandbox, the commission is considering a new kind of banking license for the companies if they succeed in their experiments, Koo said.
The new lenders, if realized, would be allowed to provide loans and payment transfer services, but not take deposits from clients, he said.
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