An amendment to the Deposit Insur-ance Act (存款保險條例) passed in the legislature yesterday, while an amendment to the Banking Act (銀行法) remained stuck in negotiation.
The amendment to the insurance act only affects new banks, and would enable the Central Deposit Insurance Co (CDIC,
Also, the CDIC can later withdraw coverage of a bank that it that are deemed not up to standards. This would almost certainly result in a mass exodus of the bank's existing customers, as the bank would be required to notify customers of the pending loss of coverage in advance.
This new rule, however, does not apply to existing banks.
The amendment also stipulates that depositors enjoy coverage on up to NT$1.5 million (US$45,796) of their savings -- NT$500,000 more than the law previously required.
The CDIC has also been granted the authority to demand that banks provide reports on their financial status in order to control insurance risks, the amendment said.
Meanwhile, another high-profile amendment affecting banks -- a change to Article 48 of the Banking Law -- did not complete the negotiation process, despite being moved from No.23 to No.3 on the legislative agenda on Thursday.
The proposed amendment, if passed, would create an interbank tracking system whereby banks could track the identity of consumers with bad debts in excess of NT$30 million, or between NT$10 million and NT$30 million that remained unpaid for one year.
Politicians have played up banking reform in the wake of the run on The Chinese Bank (中華 銀行), a subsidiary of the Rebar Asia Pacific Group (力霸亞太企業集團), on Jan. 5 after two of its subsidiaries filed for insolvency protection.
After yesterday morning's session, Legislative Speaker Wang Jin-pyng (
But the amendment failed to proceed because legislators dis-agreed on the threshold for bad debts that must be reported. Some lawmakers alleged that this was because their colleagues were themselves heavily in debt.
Democratic Progressive Party (DPP) Secretary-General Lin Chia-lung (林佳龍) said yesterday that the government should use the Rebar Group scandal as an opportunity to conduct a thorough examination of the country's financial institutions.
"No matter what the cause [of the problem] is, [the government should] find out the problem and solve it. This is what the public wishes for now," he said
Lin urged the government to solve "inappropriate relationships between politicians and businesspeople."
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Editorial: How stupid can a legislature get?
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