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： Amended on March 31 , 2020 (effective from April 1, 2020.)

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2. The Central Bank of the Republic of China (Taiwan)(hereafter referred to as "the Bank") has prescribed these Directions for processing of various accommodations to banks, such as rediscounts of eligible bills, temporary advances and refinancing of secured loans, pursuant to Article 19 of the Central Bank of the Republic of China (Taiwan) Act.

4. 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.).

6. Bills eligible for rediscounts are banker's acceptances, commercial acceptances and promissory notes generated through actual transactions in the course of producing, manufacturing, and selling by public and private enterprises.

8. 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.

10. 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.

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

14. 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.

16. 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.

18. The term of temporary advances shall not exceed ten days. The following types are provided:

(1) Temporary advances with eligible collateral;

(2) Temporary advances without eligible collateral;

(3) Intraday overdrafts.

Directions 10 to 13 shall not apply to the operations conducted by the Bank under Subparagraph 3 of the preceding paragraph. Recipients of the said operations include bills finance corporations with guarantee deposits at the Department of Banking of the Bank, where the relevant directions shall be established by the Bank.

11. In applying for temporary advances, 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.

In applying for temporary advances, a bank under the following conditions 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 temporary advances to meet the reserve requirement;

(2) Applying for temporary advances in compliance with the Bank's monetary policy, where the applied amount is within the limit of the applicant bank's reserves account B.

12. Interest on temporary advances shall be calculated in accordance with the following provisions, and shall be paid in a lump sum on the maturity date or prepayment date:

(1) For banks that provide eligible collateral, interest shall be calculated at the Bank's published interest rate (in effect at the time of the temporary advances) on refinancing of secured loans;

(2) For banks that do not provide eligible collateral, interest shall be calculated at the Bank's published interest rate (in effect at the time of the temporary advances) on temporary advances;

(3) For banks exempt from providing additional collateral when applying,in compliance with the Bank's monetary policy, for temporary advances of amounts within the limit of their reserves account B, interest shall be calculated at the Bank's published interest rate (in effect at the time of the temporary advances) on refinancing of secured loans.

13. The total amount applied for temporary advances in a given month shall not exceed ten percent of the required reserves of the applicant bank in the same month. In the event that this limit is exceeded, interest on the amount above the limit shall be calculated at 1.2 times the Bank's published interest rate on temporary advances. However,banks applying for temporary advances in compliance with the Bank's monetary policy shall not be subject to this restriction.

15. For applicant banks that have already applied to the Bank for temporary advances in two consecutive months, starting from the third month, the interest shall be calculated at 1.2 times the Bank's published interest rate on temporary advances. However, banks applying for temporary advances in compliance with the Bank's monetary policy shall not be subject to this restriction.

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

(1) Loans extended under the approval of the government and the Bank;

(2) Loans extended in compliance with the Bank's monetary policy;

(3) Emergency funding approved by the Bank;

(4) Loans to those small and medium-sized enterprises affected by severe pneumonia with novel pathogens (COVID-19).

16. For funding needs as the result of extending the loans specified in Subparagraphs 1, 2 and 4 of the preceding Direction, banks may submit a letter to the Bank to apply for refinancing of secured loans. 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.

Banks that apply for refinancing of secured loans in accordance with Subparagraph 4 of the preceding Direction shall process such loans in accordance with the operating rules of the Bank.

17. 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:

(1) Occurrence of unusual depositor withdrawals.

(2) 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.

18. The term of the Bank’s refinancing of secured loans shall not exceed 360 days. The interest shall be calculated at the Bank's published interest rate on refinancing of secured loans (in effect at the time that the refinancing is made), except for those made under the following conditions:

(1) For refinancing to meet applicant banks’ funding needs as specified in Subparagraph 1, Direction 14, the interest rate may receive a markdown, with the approval of the Bank on a special case basis, to a level not lower than the rediscount rate;

(2) For refinancing to meet applicant banks’ funding needs as specified in Subparagraph 2, Direction 14, the interest rate may receive, with the approval of the Bank on a special case basis, a markdown not exceeding fifty percent of the difference between the rate on refinancing of secured loans and the rediscount rate;

(3) For refinancing to meet applicant banks’ funding needs as specified in Subparagraph 4, Direction 14, the interest rate may receive a markdown, with the approval of the Bank on a special case basis after taking into account the impact of the epidemic in the said Subparagraph on the economy and industries.

19. 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.

21. 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.

23. 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.

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