Directions for the Central Bank of the Republic of China (Taiwan) Accommodations to Banks Inactive Regulations

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Title：

Directions for the Central Bank of the Republic of China (Taiwan) Accommodations to Banks

Inactive Regulations

Announced Date： September 19, 1972

Amended Date： July 08, 2002

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1.

1. The Central Bank of the Republic of China (Taiwan)(hereafter referred to as "the Bank") has prescribed these Directions for processing of various accommodation operations to banks, such as qualified bills rediscount, accommodations without collateral, and accommodations with collateral, pursuant to the provision of Article 19 of the Central Bank of the Republic of China (Taiwan) Act.

2.

2. Unless otherwise provided by these Directions, banks that have access to the Bank's accommodations are those that hold deposit reserve accounts with the Department of Banking of the Bank (including domestic banks, Taiwan branches of foreign banks and the Chunghwa Post Co., Ltd.).

3.

3. Bills qualified for rediscount are banker's acceptances, commercial acceptances and promissory notes generated through actual transactions in the course of production, manufacturing and selling on the part of public- and private-sector production enterprises.

4.

4. Rediscount limits shall be set by the Bank based on the scale of the bank deposits; however, when necessary, banks may be exempt from this requirement with approval of the Bank.

5.

5. Rediscounts will come to term on the maturity dates of the bills. For industrial and commercial bills, the maximum term shall not exceed 90 days; for agricultural bills, the maximum term shall not exceed 180 days.

6.

6. Rediscounted bills must be registered and endorsed by the borrowing bank.

7.

7. Interest deducted in advance for a rediscount shall be calculated at the rediscount rate published by the Bank. Prior to the maturity of rediscounted bills, banks may repurchase the said bills from the Bank, and the Bank shall refund the rediscount interest for the unmatured portion.

8.

8. If a rediscounted bill, presented for payment at maturity, is dishonored, the Bank shall immediately record a debit to the discounting bank's deposit reserve account in the amount of the bill, and return the said bill to the discounting bank.

9.

9. The maximum term of short-term accommodations shall not exceed ten days. The following types are provided:

(1)Short-term accommodations with eligible collateral.

(2) Short-term accommodations without eligible collateral.

(3)Intraday overdrafts.

[Authorized Regulations]

The Bank conducting the operations under Subparagraph 3 of the preceding paragraph, shall not apply Direction 10 to Direction 13. Recipients of the said service apply to bills finance corporations with guarantees deposited at the Department of Banking of the Bank, and the directions therefore shall be established by the Bank.

[Authorized Circulars]

10.

10. In applying for short-term accommodation, banks shall submit to the Bank rediscounted eligible bills, government bonds, the certificates of deposit issued by the Bank, or other securities approved by the Bank as collateral.

Under the following conditions, banks applying for short-term accommodations may be exempt from providing collateral or additional collateral, provided that such banks shall submit promissory notes to be paid from their banking deposit accounts with the Department of Banking of the Bank:

(1)experiencing difficulties in providing the collateral listed above when applying to the Bank for accommodations without collateral to meet the reserve requirement.

(2)applying for accommodation in order to coordinate with the Bank's monetary policy, where the amount of the accommodation is within the limit of the bank's reserves accounts B

11.

11. Interest on accommodations without collateral shall be calculated in accordance with the following provisions, and shall be paid in a lump sum on the accommodation maturity date or prepayment date:

For banks that provide eligible collateral, interest shall be calculated at the Bank's published interest rate (in effect at the time of the accommodation) for accommodations with collateral.

For banks that do not provide qualified collateral, interest shall be calculated at the Bank's published short-term accommodation interest rate in effect at the time of the accommodation.

For banks that applying for accommodation in order to coordinate with the Bank's monetary policy, and are exempt from providing additional collateral within the limit of their reserves accounts B, interest shall be calculated at the Bank's published interest rate ( in effect at the time of the accommodation) for accommodations with collateral.

12.

12. The total amount of accommodations without collateral applied for in a given month shall not exceed ten percent of the required reserves for the applicant bank in the same month. In the event that this limit is exceeded, interest on the amount over the limit shall be calculated at 1.2 times the Bank's published short-term accommodation interest rate. However, banks applying for accommodation in order to coordinate with the Bank's monetary policy shall not be subject to this restriction.

13.

13. For applicant banks that have already applied to the Bank for accommodations in two consecutive months, starting from the third month, the interest shall be calculated at 1.2 times the Bank's published short-term accommodation interest rate. However, this provision shall not apply to banks applying for accommodations in order to coordinate with the Bank's monetary policy.

14.

14. The Bank's refinancing of secured loans to banks shall be limited to the following:

(1)Undertaking government-approved lending which is also approved by the Bank.

(2)Lending undertaken compatible with the Bank's monetary policy.

(3)Emergency funding requirements as approved by the Bank.

15.

15. For funding required by banks as the result of lending approved by both the government and the Bank, or for lending undertaken to coordinate with the Bank's monetary policy, banks may submit a letter to the Bank to apply for discount of secured loans, provided that those banks not providing securities approved by the Bank as collateral shall further submit a promissory note for payment from their banking deposit accounts established with the Department of Banking of the Bank.

16.

16. For emergency funding requirements caused by the following conditions , banks may submit a letter of explanation to the Bank, along with the Bank-approved securities or reserves accounts B as collateral, to apply to the Bank for discount of secured loans:

Occurrence of unusual depositor withdrawals.

Occurrence of unusual depositor withdrawals at financial institutions responding to the need to remit deposit reserves to the said bank, when the said bank undertakes emergency funding accommodations according to procedures.

17.

17. The maximum term of Bank discount of secured loans shall not exceed 360 days. The interest shall be calculated at the Bank's published interest rate for accommodations with collateral (in effect at the time that the accommodation is made). However, this provision shall not apply to accommodation interest rates under the following conditions:

(1)For discount in support of the funding requirements in Subparagraph 1, Direction 14, where special-case theBank approval has been obtained to reduce the interest rate to not lower than the rediscount rate.

(2) For discount in support of the funding requirements in Subparagraph 2, Direction 14, in cases on special-case consideration, the Bank has approved to reduce the interest rate, but the amount of reduction must not exceed fifty percent of the difference between the secured lending accommodation interest rate and the rediscount rate.

18.

18. Regarding the principal and interest for the various accommodations payable to the Bank, borrowing banks may effect payment from their banking deposits accounts established with the Department of Banking of the Bank using the online procedures of the Bank's Interbank Funds Allocation and Clearing System.

19.

19. In deciding whether to approve or reject applications for various types of accommodations, the Bank may refer to the applicant bank's credit rating, the effectiveness of client's credit background checks, the bank's general reserve position, the purpose of the accommodation, cooperation with the Bank's monetary policy, and any major violations or bad records in the past year.

20.

20. In applying to the Bank for various types of accommodation, the applicant shall carry out all related procedures at the Discount Window Division of the Bank's Department of Banking.

21.

21. The provisions of Directions 9 to 20 shall apply, mutatis mutandis, to trust and investment companies.