The Taiwan High Court rendered the 105-Shang-Yi-689 Civil Decision of February 8, 2017 (hereinafter, the “Decision”), holding that since an unsecured personal loan agreement between a bank and an individual is not a cash card or credit card within the meaning of Article 47-1, Paragraph 2 of the Banking Law, it is not subject to the 15% annual interest rate cap.
According to the facts underlying this Decision, Individual A had applied to Bank B for a VISA card and an unsecured loan but subsequently failed to repay the debts, Bank B filed a complaint to seek repayment of the credit card and unsecured loan claims.
According to the Decision, Article 47-1, Paragraph 2 of the Banking Law provides that beginning with September 1, 2015, the revolving interest rate charged by a bank for cash cards or by a credit card operator for credit cards shall not exceed an annual interest rate of 15%. According to the legislative reasons for amendments, many banks have engaged in illegal acts and sought to evade control measures taken by the Ministry of Finance to reduce interest rates of general consumption loans by forcefully marketing cash cards and credit cards, for which a high 20% revolving interest rate is charged; and since this has seriously exploited economically disadvantaged debtors and jeopardized the economic system and financial order of this nation, this issue should be addressed. However, the “unsecured personal loans” provided by banks are obviously not cash cards or credit cards within the meaning of Article 47-1, Paragraph 2 of the Banking Law. Therefore, they are certainly not subject to the 15% annual interest rate cap.
It was further held in this Decision that since it was inappropriate for the original trial court to merely allow the delay interest on the unsecured loan in this case to be calculated by an annual interest rate of 15% and rule against the Appellant with respect to the excess portion, this portion of the original decision was reversed and it was ruled, instead, that the Appellee shall pay the delay interest based on the annual interest rates of 20% and 17.38% as agreed by both parties.