The Financial Supervisory Commission (FSC) has asked banks to expedite the review and processing of loans of less than NT$5 million (US$165,827) to help companies affected by the COVID-19 outbreak.
Banks should decide whether to approve such loans within 15 working days, the FSC said, adding that it could further reduce the review period to within seven days for loans under NT$1 million.
“Banks usually have a set of procedures for arriving at a decision, such as interviews with applicants, credit checks, collateral appraisal and on-site examination,” a commission official said by phone.
Photo: Chien Jung-fong, Taipei Times
“We are not asking them to skip any steps as they still need to monitor loan quality. However, we hope they can make a decision faster on whether to approve or reject a loan to lessen the pressure on borrowers,” the official said.
The commission, which last month asked all banks to provide loan extensions for businesses hit by the pandemic, ordered banks to approve the extension within two weeks, but left it to banks to decide on the duration of the extension and the interest rate.
As of Monday, local banks have received 2,322 applications totaling NT$35.18 billion from affected businesses, and approved 510 applications, or a total of NT$7.39 billion in loans, commission data showed.
To provide an incentive, the commission would reward banks that offer the most assistance to affected firms by allowing them to launch new programs or products in the future.
Chinese Nationalist Party (KMT) Legislator William Tseng (曾銘宗) yesterday said that the measure might not be helpful to small and medium-sized enterprises (SMEs).
Among the nation’s 1.46 SMEs, 89 percent, or 1.3 million, have never applied for credit, Tseng told a meeting at the Legislative Yuan.
“The interest rate for loans of less than NT$2 million is just 1 percent, which should be attractive to borrowers. We can help enterprises that have never applied for a bank loan,” FSC Chairman Wellington Koo (顧立雄) said.
Compared with the state-run banks, privately owned banks have offered less help, approving 117 applications or NT$2.78 billion in loans, accounting for 23 percent and 37 percent respectively of the total, commission data showed.
“It is not that we are less willing to help affected businesses, but as a private company, we have to scrutinize loan applications, as we are under more pressure if our non-performing loan ratio rises,” a bank manager said by phone on condition of anonymity.
If the government eases its regulations on non-performing loan ratios, such as allowing banks to write off bad debts later, banks would be less conservative, he said.
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