Less than a week before a planned protest of thousands of fishermen and farmers, the Cabinet announced last night that it will immediately suspend a three-tier risk-control mechanism over the credit units of farmers' and fishermen's associations.
The Cabinet said it was indefinitely suspending the regulations because its attempts to deal with the problems of grassroots credit units has been misinterpreted as a move to destroy farmers' and fishermen's associations, Cabinet Secretary General Liu Shih-fang (
Despite the suspension of the risk-control measures, the government will continue monitoring credit cooperatives with high non-performing loan ratios, because they still pose a threat to the nation's financial health, Liu said.
The Cabinet on Saturday said it was considering shifting supervision over the grassroots credit units from the Ministry of Finance to the Council of Agriculture.
After a three-hour intra-ministerial meeting presided over by Minister-without-portfolio Hu Sheng-cheng (
In addition, the Cabinet will call a summit by the end of November on agricultural financing and the consolidation of grassroots credit units, Cabinet Spokesman Chuang Suo-hang (
Even though it has no experience of financial supervision, the Council of Agriculture would like to take on this role to meet increasing demands from grassroots lenders, council Chairman Fan Chen-tsung (范振宗) said after the meeting.
The Cabinet's announcement comes ahead of a mass protest on Saturday in which organizers say as many as 100,000 farmers and fishermen will demonstrate in Taipei to voice their dissatisfaction with the way the finance ministry has handled the cleanup of grassroots credit units.
The finance ministry had originally proposed making permanent the three-tier risk-control mechanism that has been in use since early September and restricts their lending and saving businesses.
More than 100 credit units with non-performing loan ratios of more than 25 percent have NT$88.7 billion in bad loans. Seventy-six credit units have a bad-loan ratio of between 15 percent and 25 percent, amounting to NT$35 billion in bad loans. Another 65 credit cooperatives have less than 10 percent in bad loans, worth NT$8.4 billion.
To ease growing tension with farmers' and fishermen's associations, the ministry said yesterday it may consider adjusting some of the requirements for credit cooperatives with high bad-loan ratios, beginning this week.
Vice Minister Susan Chang (
If credit units with an bad-loan ratio of between 10 percent and 15 percent "promise" to reduce the ratio to below 10 percent for a period of three months, the ministry would lift all restrictions on their lending, Chang said.
The ministry's risk-control mechanism had previously prohibited credit units with a bad-loan ratio above 10 percent from accepting deposits from non-members. It also banned credit units with a bad-loan ratio of between 15 percent and 25 percent from granting loans of more than NT$3 million to sponsoring members, who are not fishermen or farmers but who have invested in the association.
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