Lawmakers are still haggling over the details of an amendment aimed at making public the names of heavy bad debtors amid controversy over whether the move would help banks improve their financial structure or result in a financial crisis.
Failing to reach consensus on an amendment to Article 48 of the Banking Act (
The amendment, which had passed a first review in the legislature, was introduced by Democratic Progressive Party Legislator Lin Chung-mo (
The recent run on The Chinese Bank (
The amendment, however, again encountered opposition last week as it had over the past six years.
Based on Lin's proposal, banks will be under no obligation to keep in confidence information on customers whose bad debts exceed NT$30 million (US$916,000) or are below NT$10 million but have remained unpaid for a whole year.
"One of our concerns is whether the disclosure may encourage banks to withdraw funding from these businesses," Chinese Nationalist Party (KMT) Legislator Joanna Lei (雷倩) said.
Financial Supervisory Commission (FSC) officials told lawmakers during last Friday's negotiation that as of the end of 2005, there were 19,385 accounts that owed debts exceeding NT$10 million, of which 6,108 owed in excess of NT$30 million .
"How big will the impact be if we make public all 19,385 accounts? We need to see an analysis of the impact [of such a move] before agreeing to the amendment," Lei said.
KMT legislative caucus whip Tsai Chin-lung (蔡錦隆) has said that the party would agree to the amendment only when the threshold of disclosure is set at NT$100 million.
People First Party Legislator Christina Liu (劉憶如), who initially supported Lin's recommendation, last Friday proposed a new version of the amendment.
Liu suggested that the Joint Credit Information Center, an institution dedicated to creating a nationwide credit information databank, disclose the names of heavy bad debtors after summing up the total amount of debts owed by these borrowers in all banks.
"The proposal will prevent a single bank from using its right of disclosure as a tool to maliciously attack some businesses," Liu said.
Lin, however, said that he was sticking with his proposal.
"The amendment does not demand that bank automatically disclose the name of the borrowers. It only removes banks' obligation to keep such information confidential. With the amendment, the Financial Supervisory Commission will be able to better manage the financial industry," he said.
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