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FSC stipulated the Regulations Governing the Sale of Non-Performing Loans
Trisha Chang/Emily Hsu
FSC stipulated the Regulations Governing the Sale of Non-Performing Loans on 31 July 2013, effective on the same date. Main points of the Regulations are as follows:
1.
Insurance enterprises shall recover non-performing loans themselves; provided that in the following situations, insurance enterprises may sell the non-performing loans:
(1)
the average overdue loan ratio of an insurance enterprise is above 3% at the end of the most recent four quarters; the total amount of secured loans accounts for at least 10% of working capital ratio; the insurance enterprise has failed to improve recovery of non performing loans; and the case has been passed by a resolution of the board of directors/council.
(2)
syndicated loan cases or the case in which the borrower is the same as the borrower in a syndicated loan case which needs to be dealt together with the syndicated loan case.
2.
Insurance enterprises' sale of non-performing loans shall stipulate the negative qualification of the legitimate business operator-buyers and the insurance enterprises and the buyers shall agree that inappropriate recovery of non-performing loans is not allowed.
3.
Insurance enterprises shall sell the non-performing loans via public auctions and the sale shall be conducted according to the procedure stipulated in these Regulations; in addition, after the resolution on the sale of non-performing loans is passed by the board of directors/council of an insurance enterprise, the related information shall be uploaded to the Market Observation Post System and announced on the company website of such insurance enterprise.
4.
Insurance enterprises' sale of non-performing loans shall be conducted in accordance with the content of these Regulations which shall be incorporated into the internal control and internal audit items and the insurance enterprises shall perform internal audit and self assessment according to the Regulations Governing Insurance Enterprises' Implementation of Internal Control and Auditing System.
