The government’s plan to push through an amendment that would lower the interest rate cap for credit cards and cash cards to 12.5 percent was delayed yesterday by the Democratic Progressive Party (DPP).
The Chinese Nationalist Party (KMT) caucus and the Financial Supervisory Commission (FSC) announced late on Monday that they had reached a consensus to lower the interest rate ceiling from around 20 percent to 12.5 percent.
Judiciary and Organic Laws and Statutes Committee convener Wu Ching-chih (吳清池), KMT Legislator Hsieh Kuo-liang (謝國樑) and KMT caucus deputy secretary-general Lu Hsueh-chang (呂學樟) had voiced confidence on Monday that the caucus would push the bill through by prioritizing it in yesterday’s plenary session, thus allowing the amendment to take effect at the end of this month.
However, the plenary session was stalled yesterday morning as the KMT tried to seek DPP support for the bill.
Lu later told reporters that the caucus would do its best to negotiate with the DPP caucus, while Legislative Speaker Wang Jin-pyng (王金平) said the KMT should have sought the DPP’s consent before announcing its “consensus” with the FSC.
Wang said the bill could be stalled for up to one month if the DPP proposes more negotiations.
The interest rate ceiling has been the subject of debate since the committee completed a preliminary review of a KMT proposal on March 19 that would cut the cap on all contracted interest rates from 20 percent to 9 percent above the central bank’s rate for three-month loans without collateral.
With the central bank’s short-term lending rate at 3.5 percent, that would be 12.5 percent.
The bill, however, drew strong opposition from foreign and domestic banks and analysts.
The Cabinet on March 23 said that the ceiling on interest rates for credit cards and cash cards should instead be capped at 15.5 percent, based on the maximum 12 percent interest rate for non-collateralized loans set by the central bank, plus a floating annual rate that is currently set at 3.5 percent.
But KMT lawmakers had voiced disagreement with the Cabinet’s announcement, saying that the Cabinet should take responsibility for alleviating the suffering of debtors.
DPP caucus secretary-general Gao Jyh-peng (高志鵬) lashed out at FSC Chairman Sean Chen during a press conference yesterday, saying that the caucus would never accept the KMT’s decision to push the bill through without negotiating with the DPP.