Preventing Excessive Credit Expansion! FSC to Monitor 'Personal Wealth Turnover Loans' Monthly Starting October

In recent years, Taiwan's stock market has seen heightened trading activity, even giving rise to the phenomenon known as the 'Four Loans Together,' where many investors flexibly use multiple channels—such as personal credit, mortgages, auto loans, and stock collateral loans—to raise funds and amplify investment leverage. The Central Bank recently issued warnings about this trend.

Today (4th), the Financial Supervisory Commission (FSC) announced that starting in October, domestic banks will be required to report figures for 'Personal Wealth Turnover Loans.' This measure aims to continuously monitor fund flows and prevent systemic financial risks caused by excessive credit expansion.

To clarify how much of personal borrowing is flowing into financial instruments such as stocks and mutual funds, current reporting from banks to the Central Bank already includes a category labeled 'Wealth Management Loans for Investment in Financial Instruments.' However, such data is not yet included in reports submitted to the FSC.

Wang Yun-chung, Deputy Director of the FSC’s Banking Bureau, explained that historically, banks have reported turnover loans by combining corporate and individual data and classifying them by collateral type, lacking dedicated statistics solely for 'personal wealth purposes.' To address this gap, the FSC has instructed domestic banks to add a new reporting item: 'Personal Wealth Turnover Loans.'

According to Wang, banks are only required to submit a single 'total amount' figure to the FSC—not detailed breakdowns. The funds must be personal loans where customers have explicitly stated or selected 'investment and wealth management' as the purpose, covering a broad range of financial products including stocks, funds, bonds, investment-linked insurance policies, and derivatives.

Covered business activities include: wealth management mortgages, mortgage top-up loans (not used for home purchases), stock pledge/valuable securities collateralized loans, personal unsecured loans, and a few other turnover loans (e.g., operating capital loans for sole proprietors/partnerships or employee stock purchase program loans).

Aligned with system adjustments at banks, domestic banks will officially begin submitting data for September starting in October, serving as the basis for the FSC’s ongoing risk management efforts.