Hsieh Kuo-liang (謝國樑), head of the legislature’s Judiciary and Organic Laws and Statutes Committee, said yesterday he would pursue a legal amendment to lower the caps on credit and cash card interest rates by 5 percent.
At a press conference at the Chinese Nationalist Party (KMT) caucus, Hsieh applauded Financial Supervisory Commission (FSC) Chairman Sean Chen (陳沖) for trying to persuade banks to lower credit and cash card interest rates.
However, Hsieh said that such tactics had proved ineffective, as many banks were only willing to make marginal cuts.
Hsieh was referring to Chen’s appeal to credit card issuers after the central bank cut its benchmark interest rate for the sixth time since September, for a total of 2.125 percentage points.
The highest revolving interest rates from banks on credit and cash cards have remained unchanged at 19 percent and 20 percent respectively.
FSC officials said on Tuesday that 10 major credit card issuers were scheduled to finalize their rate cuts by tomorrow at the earliest.
Despite the FSC’s announcement, Hsieh said he believed the best way to give credit and cash card debtors a break was to amend Article 205 of the Civil Code, which sets the ceiling for rates at 20 percent.
Hsieh said many banks justified their high credit and cash card interest rates — which range between 15 percent and 20 percent — by citing the article, a practice Hsieh described as “legal, but unethical.”
Hsieh said the article had not been amended since it took effect in 1929.
The proposed amendment to lower the ceiling to 15 percent was in line with recent global interest rate cuts, he said.
“It’s time to make a thorough adjustment,” he said. “Banks can still make a lot of profit with the cap at 15 percent ... Lowering the ceiling would not affect the operations of banks.”
Hsieh said that he hoped the proposal would be included as a caucus priority for the spring legislative session.
If members of the legislature do not have a problem with the new ceiling, the bill could clear the legislative floor as early as the end of March, he said.
But he did not rule out the possibility of calling for a vote on the proposal.
KMT Legislator Wu Ching-chih (吳清池), another head of the committee, also voiced support for Hsieh’s proposal.
“The government should abandon its persuasion strategy and take the initiative to intervene [in unreasonably high credit and cash card interest rates],” he said.