Cardholders who have decent credit records will be able to enjoy lower lending rates in the future, as banks are required to offer graded pricing starting from next month, as part of the financial regulator's plan to restructure the debt-ridden credit and cash-card sector.
Meiji Chen (陳明智), head of the card business division at Union Bank of Taiwan (聯邦銀行), told the Taipei Times in a telephone interview yesterday that, "We are in the process of establishing our own credit scoring system ? we should be able to complete the work by the end of June and start providing our cardholders with interest rates that vary on their credit risks."
The procedure offers banks a chance to review their customer structure and quality in order to filter out and closely monitor risky cardholders in the early stages, Chen said.
Union Bank is the nation's fourth-largest credit card issuer with 2.91 million cards in circulation as of January. The bank's bad-debt ratio jumped to 4.45 percent in January from 2.95 percent a month earlier amid the nation's snowballing credit and cash card crisis, according to figures by the Banking Bureau.
Factors in deciding each individual cardholder's credit score include the duration of his/her cardholding, repayment history and general borrowing or default records with other lenders, Chen said.
Union Bank would divide interest rates into 10 grades likely to range from 3 percent to nearly 20 percent, according to the industry veteran.
The Financial Supervisory Commission said on Thursday that credit and cash-card issuers that already have a credit scoring mechanism in place are required to begin tiered pricing from April 1.
Those who are in the process of setting up the system will need to offer graded interest rates no later than July 1, the commission said.
Card issuers are obligated to disclose tiered rates for consumer reference and cannot refuse inquiries from cardholders about their credit ratings and applicable rates in the future, the financial regulator added.
The differentiated pricing only applies to credit and cash card lending for the moment. Banks can extend the application process to unsecured or secured loans, the commission said.
The financial watchdog's decision was made in light of public concern over the handsome profits earned from credit-card lending rates, some of which were as high as 20 percent, in comparison with the minimal rates of around 2 percent to 3 percent given to savings customers.
Similarly, Shinkong Bank (新光銀行), which dropped into the red over the last two months because of mounting card-related bad debt, is expected to roll out its own graded interest rate charges in May, bank president Lee Tseng-chang (李增昌) said.
The bank spent more than US$500,000 in hiring the US' Boston Consulting Group to help set up their own credit scoring system and early warning function, Lee said.
Shinkong Bank issued 1.4 million cards which incurred cumulative net losses of NT$460 million (US$14.08 million) for the first two months of this year, the bank said last week.
Meanwhile, the semi-official Joint Credit Information Center (聯合徵信中心) will start next month by giving consumers an aggregate personal credit score that ranges from 300 points to 800 points. Higher scores represent better credit.
Consumers can spend NT$100 on obtaining their own credit rating and use the information to negotiate with banks for preferential interest rates when applying for all kinds of loans.
KEEPING UP: The acquisition of a cleanroom in Taiwan would enable Micron to increase production in a market where demand continues to outpace supply, a Micron official said Micron Technology Inc has signed a letter of intent to buy a fabrication site in Taiwan from Powerchip Semiconductor Manufacturing Corp (力積電) for US$1.8 billion to expand its production of memory chips. Micron would take control of the P5 site in Miaoli County’s Tongluo Township (銅鑼) and plans to ramp up DRAM production in phases after the transaction closes in the second quarter, the company said in a statement on Saturday. The acquisition includes an existing 12 inch fab cleanroom of 27,871m2 and would further position Micron to address growing global demand for memory solutions, the company said. Micron expects the transaction to
Vincent Wei led fellow Singaporean farmers around an empty Malaysian plot, laying out plans for a greenhouse and rows of leafy vegetables. What he pitched was not just space for crops, but a lifeline for growers struggling to make ends meet in a city-state with high prices and little vacant land. The future agriculture hub is part of a joint special economic zone launched last year by the two neighbors, expected to cost US$123 million and produce 10,000 tonnes of fresh produce annually. It is attracting Singaporean farmers with promises of cheaper land, labor and energy just over the border.
US actor Matthew McConaughey has filed recordings of his image and voice with US patent authorities to protect them from unauthorized usage by artificial intelligence (AI) platforms, a representative said earlier this week. Several video clips and audio recordings were registered by the commercial arm of the Just Keep Livin’ Foundation, a non-profit created by the Oscar-winning actor and his wife, Camila, according to the US Patent and Trademark Office database. Many artists are increasingly concerned about the uncontrolled use of their image via generative AI since the rollout of ChatGPT and other AI-powered tools. Several US states have adopted
A proposed billionaires’ tax in California has ignited a political uproar in Silicon Valley, with tech titans threatening to leave the state while California Governor Gavin Newsom of the Democratic Party maneuvers to defeat a levy that he fears would lead to an exodus of wealth. A technology mecca, California has more billionaires than any other US state — a few hundred, by some estimates. About half its personal income tax revenue, a financial backbone in the nearly US$350 billion budget, comes from the top 1 percent of earners. A large healthcare union is attempting to place a proposal before
RSS