A bill that would reduce the interest that banks can tack onto late credit card payments passed its first reading in the legislature yesterday.
The bill would cut the limit on all contracted interest rates from 20 percent to 9 percent above the central bank’s rate for three-month loans without collateral.
That would be 12.5 percent, after the central bank cut the short-term lending rate to 3.5 percent last month.
Chinese Nationalist Party (KMT) Legislator Hsieh Kuo-liang (謝國樑), who is sponsoring the bill, said the measure would help the interest rates for revolving credit reflect the series of rate cuts the central bank adopted in the last six months to stimulate private consumption.
The change could substantially ease the financial burden of credit and cash card holders who cannot afford to pay their debts, he said.
Present interest rates are “unreasonably high,” often at 15 to 20 percent, he said.
Hsieh said civic groups and those struggling to make ends meet had called for the reform. The bill must pass a second and third reading before it is enacted.
“The bill may clear the legislature in two or three weeks,” Hsieh said by telephone. “No colleague voiced protest during the committee review.”
Domestic banks had expressed strong opposition to the legislature taking any step to cut the cap without considering banks’ operating risks.
After yesterday’s reading, a foreign bank executive who requested anonymity said lower rates would drag down some card issuers who were already struggling.
Desmond Chen (陳義中), senior vice president of Ta Chong Bank (大眾銀行), yesterday said his bank would have to stop issuing credit cards to consumers with bad credit if the bill is passed.
Banks are profit-seeking businesses and will be forced to raise fees for other services to stay in the black, he said.
Taipei Fubon Bank (台北富邦銀行) said it was looking at contingency measures.
Financial Supervisory Commission Vice Chairman Wu Tang-chieh (吳當傑) yesterday sided with banks, saying that legislators meant well, but the bill could drive people to underground lenders because banks would not engage in unprofitable business.
Credit borrowing costs average about 13 percent and would hit 16 percent after credit risk is taken into consideration, he said.
Without the incentive of profit, banks would quit the credit card business altogether, prompting desperate borrowers to turn to underground lenders, who charge much higher interest, the official said.
ADDITIONAL REPORTING BY JOYCE HUANG
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source