A bill that would reduce the interest that banks can tack onto late credit card payments passed its first reading in the legislature yesterday.
The bill would cut the limit on all contracted interest rates from 20 percent to 9 percent above the central bank’s rate for three-month loans without collateral.
That would be 12.5 percent, after the central bank cut the short-term lending rate to 3.5 percent last month.
Chinese Nationalist Party (KMT) Legislator Hsieh Kuo-liang (謝國樑), who is sponsoring the bill, said the measure would help the interest rates for revolving credit reflect the series of rate cuts the central bank adopted in the last six months to stimulate private consumption.
The change could substantially ease the financial burden of credit and cash card holders who cannot afford to pay their debts, he said.
Present interest rates are “unreasonably high,” often at 15 to 20 percent, he said.
Hsieh said civic groups and those struggling to make ends meet had called for the reform. The bill must pass a second and third reading before it is enacted.
“The bill may clear the legislature in two or three weeks,” Hsieh said by telephone. “No colleague voiced protest during the committee review.”
Domestic banks had expressed strong opposition to the legislature taking any step to cut the cap without considering banks’ operating risks.
After yesterday’s reading, a foreign bank executive who requested anonymity said lower rates would drag down some card issuers who were already struggling.
Desmond Chen (陳義中), senior vice president of Ta Chong Bank (大眾銀行), yesterday said his bank would have to stop issuing credit cards to consumers with bad credit if the bill is passed.
Banks are profit-seeking businesses and will be forced to raise fees for other services to stay in the black, he said.
Taipei Fubon Bank (台北富邦銀行) said it was looking at contingency measures.
Financial Supervisory Commission Vice Chairman Wu Tang-chieh (吳當傑) yesterday sided with banks, saying that legislators meant well, but the bill could drive people to underground lenders because banks would not engage in unprofitable business.
Credit borrowing costs average about 13 percent and would hit 16 percent after credit risk is taken into consideration, he said.
Without the incentive of profit, banks would quit the credit card business altogether, prompting desperate borrowers to turn to underground lenders, who charge much higher interest, the official said.
ADDITIONAL REPORTING BY JOYCE HUANG
CSBC Corp, Taiwan (台灣國際造船) yesterday released the first video documenting the submerged sea trials of Taiwan’s indigenous defense submarine prototype, the Hai Kun (海鯤), or Narwhal, showing underwater navigation and the launch of countermeasures. The footage shows the vessel’s first dive, steering and control system tests, and the raising and lowering of the periscope and antenna masts. It offered a rare look at the progress in the submarine’s sea acceptance tests. The Hai Kun carried out its first shallow-water diving trial late last month and has since completed four submerged tests, CSBC said. The newly released video compiles images recorded from Jan. 29 to
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) plans to make advanced 3-nanometer chips in Japan, stepping up its semiconductor manufacturing roadmap in the country in a triumph for Japanese Prime Minister Sanae Takaichi’s technology ambitions. TSMC is to adopt cutting-edge technology for its second wafer fab in Kumamoto, company chairman C.C. Wei (魏哲家) said yesterday. That is an upgrade from an original blueprint to produce 7-nanometer chips by late next year, people familiar with the matter said. TSMC began mass production at its first plant in Japan’s Kumamoto in late 2024. Its second fab, which is still under construction, was originally focused on
DETERRENCE EFFORTS: Washington and partners hope demonstrations of force would convince Beijing that military action against Taiwan would carry high costs The US is considering using HMAS Stirling in Western Australia as a forward base to strengthen its naval posture in a potential conflict with China, particularly over Taiwan, the Wall Street Journal reported on Saturday. As part of its Indo-Pacific strategy, Washington plans to deploy up to four nuclear-powered submarines at Stirling starting in 2027, providing a base near potential hot spots such as Taiwan and the South China Sea. The move also aims to enhance military integration with Pacific allies under the Australia-UK-US trilateral security partnership, the report said. Currently, US submarines operate from Guam, but the island could
The partisan standoff over President William Lai’s (賴清德) proposed defense budget has raised questions about the nation’s ability to adequately fund its own defense, the US Congressional Research Service (CRS) said in a report released on Tuesday. The report, titled Taiwan: Defense and Military Issues, said the government has increased its defense budget at an average annual rate of 5 percent from 2019 to 2023, with about 2.5 percent of its GDP spent on defense in 2024. Lai in November last year proposed a special budget of about US$40 billion over eight years, and said he intends to increase defense spending to
RSS