Outstanding credit and cash card bad loans could be a much bigger problem than anticipated, as the average debt of cardholders is nearly four times that of official estimates, according to figures released by domestic banks last week.
Each consumer who has sought help through the recently established debt-negotiation mechanism for repayment solutions owes about NT$1.9 million (US$58,640), said Charles Lo (
That is equivalent to 62 times the amount of the average debtor's monthly wage of about NT$30,000, Lo said.
ESTIMATES LOWER
The figure is also four times official estimates.
The Financial Supervisory Commission said last week that the bad debt of each cardholder had been estimated at about NT$500,000. It said more than 500,000 people have defaulted on their unsecured, credit or cash card loans for more than three months.
Total non-performing loans were approximately NT$260 billion, up from an estimated NT$240 billion three months ago, the commission said.
The extent of the consumer debt problem began triggering alarms around the middle of last year, and lenders moved to tighten credit. The problem snowballed as a large number of debtors could no longer borrow money to pay off their card debts.
MECHANISM
To help cardholders, the Bankers Association (
As of last week, 31,395 applications had been accepted and approximately 10,000 cases had been resolved, which could represent debts amounting to NT$25.4 billion, Lo said.
In an attempt to help resolve the bad debt problem as soon as possible, the commission said yesterday that it will try to give assistance in areas such as facilitating debt negotiations and finding jobs for cardholders who want to pay off their debts but don't have the resources.
MORE PROMOTION
Banks should promote the debt-negotiation mechanism as hard as they have been promoting their credit or debit cards, the commission said. It also urged the borrowers to use the system to resolve their debt problems.
The commission will form a task force to inspect banks to ensure they are using the negotiation mechanism, it said.
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