FSC Heeds Public Opinion, Extends Personal Debt Settlement Mechanism to End of December 2023

Earlier, in response to the impact of the COVID-19 pandemic on personal finances, the Financial Supervisory Commission of the Republic of China (FSC) issued letters on February 18, May 29, and December 25, 2020, and on June 2 and November 30, 2021, and May 19, 2022, asking banks to offer measures such as deferred payment or a 3-to-6-month extension to those facing difficulty repaying loans due to the pandemic. The original deadline for accepting such extension applications was the end of June 2023.

To help the public adjust smoothly during the post-pandemic economic recovery, the FSC coordinated with banks on March 29, 2023, to extend the acceptance period for the debt settlement mechanism for credit cards and other personal loans to the end of December 2023.

On March 29, the FSC invited the Bankers Association of the Republic of China and relevant banks to hold discussions and reached the following conclusions:

1. Eligible parties for the settlement mechanism: members of the public facing difficulty repaying loans due to the pandemic.

2. Product scope of the settlement mechanism: personal financial products (including mortgages, car loans, consumer loans, credit card balances, etc.).

3. Settlement measures:

4. Credit card balances: payment due on credit card bills may be deferred for 3 to 6 months, with no penalty or revolving interest charged during the deferral period.

5. Other personal loans: principal or interest may be extended for 3 to 6 months, with no penalty or late interest charged during the extension period.

6. Settlement mechanism period: the deadline for accepting applications is extended from the end of June 2023 to the end of December of the same year (2023). Members of the public facing difficulty repaying loans due to the pandemic may apply to their bank for a 3-to-6-month deferral or extension within the acceptance period, and applications are not limited to one time.

7. Personal credit records: personal credit records are not affected during the extension period.

Applicants are reminded here that although personal credit records are not affected during the extension period, if repayment is not made on time within the extension period, interest and related fees will be incurred.

Therefore, it is recommended that before applying for an extension, members of the public first understand the amount to be repaid and the interest and fees incurred during the extension period, and assess their own repayment capacity, so as to avoid increased repayment pressure and unnecessary burdens after deferring repayment.

In addition to the deferral and extension measures provided by financial institutions, applicants may also consider other financial arrangements, such as adjusting living expenses or seeking social welfare subsidies, to reduce their burden and maintain a good credit record. During the economic recovery, we should all work together and support one another to get through this difficult period.

Finally, the FSC calls on banks to handle extension applications properly and ensure that applicants’ rights are not harmed. At the same time, it hopes that members of the public can understand the relevant extension measures early and proactively apply to their bank when necessary, so as to protect their own rights and credit records.