Do Taiwan's Banking Laws Restrict Loans for Permanent Residents?

Legal Rights, Financial Inclusion, and Taiwan’s Banking Regulations

Taiwan is widely regarded for its democratic values, economic strength, and legal protections for residents, including foreign nationals with long-term residency. However, when it comes to financial services, many permanent residents encounter barriers—one of the most debated being access to personal loans. Some banks claim that they are legally prohibited from lending to non-citizen residents. But does Taiwan’s law actually impose such restrictions?

Constitutional Principles and Equal Protection

Taiwan's Constitution guarantees fundamental rights that extend beyond citizenship, particularly in areas of legal protection, equal treatment, and economic participation. Although some rights—such as voting and holding public office—are reserved for citizens, the principles of fairness, due process, and economic freedom apply more broadly.

The ROC (Taiwan) Constitution, particularly Article 7, states:

“All citizens of the Republic of China, irrespective of sex, religion, ethnic origin, class, or party affiliation, shall be equal before the law.”

While this article explicitly mentions "citizens," Taiwan's legal framework also recognizes protections for non-citizens, particularly permanent residents who have established long-term ties to the country. Taiwan has ratified international human rights treaties, such as the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social, and Cultural Rights (ICESCR), both of which emphasize non-discrimination and equal access to economic opportunities.

Banking Laws: What Do They Really Say?

Taiwan’s Banking Act (???) and financial regulations govern lending practices, setting out rules for risk management, fair competition, and financial security. However, nowhere in the Banking Act is there a provision explicitly prohibiting banks from lending to permanent residents.

Instead, banks operate under financial prudence guidelines issued by the Financial Supervisory Commission (FSC), which require institutions to assess credit risk before issuing loans. This includes evaluating factors such as:

• Income stability
• Credit history
• Employment status
• Residency status (but not necessarily citizenship)

Banks in Taiwan have the discretion to set their own lending policies based on risk evaluation, but discretion does not mean legal prohibition. If a bank refuses to lend to a permanent resident and justifies it by citing "the law," it is reasonable to request clarification regarding which specific legal provision enforces such a rule.

Residency Status and Financial Rights

Foreign residents in Taiwan fall into different legal categories, including:

1. Permanent Residents (APRC holders) – Long-term residents with almost all the rights of citizens, except for voting and political participation.
2. Resident Visa Holders (ARC holders) – Temporary residents with employment, education, or family ties in Taiwan.
3. Short-Term Visitors – Individuals on visas for tourism, business, or short stays.

Under Taiwan's legal system, APRC holders have greater stability and economic rights than ARC holders. Since permanent residents often have stable employment, property ownership rights, and tax obligations similar to citizens, there is no inherent reason for them to be excluded from financial services such as loans.

Are Banks Discriminating?

If no law explicitly restricts loans to non-citizen residents, why do some banks enforce such policies? Several reasons might explain this:

• Institutional Risk Aversion: Some banks may view non-citizens as higher-risk borrowers, even when their financial records suggest otherwise.
• Internal Bank Policies: Instead of being a legal requirement, some banks may impose restrictions as part of their corporate policies.
• Regulatory Ambiguity: Banks may interpret financial guidelines conservatively to avoid complications with regulatory compliance.

However, discrimination based solely on residency status—without a valid risk-based justification—could be seen as unfair or even in violation of financial ethics and consumer rights.

Legal Recourse and Financial Inclusion

If a permanent resident is denied a loan solely on the claim that "the law prohibits it," they have the right to:

1. Request a Written Explanation – Ask the bank to provide a reference to the specific law or regulation that justifies their refusal.
2. Report to the Financial Supervisory Commission (FSC) – If the refusal appears to be arbitrary, a complaint can be filed with the FSC, which oversees banking operations.
3. Seek Legal Clarification – Consulting a lawyer or legal expert in financial regulations can help determine whether a bank's policy is legally justified or discriminatory.

Taiwan has made progress in financial inclusion, but ensuring that permanent residents have fair access to economic opportunities is essential for maintaining a just and competitive financial system.

Conclusion: Transparency and Equal Economic Participation

In a modern economy like Taiwan’s, financial access should be determined by an individual’s economic stability and creditworthiness, not just their citizenship status. While banks have the right to assess financial risk, they also have a responsibility to ensure that their policies align with legal frameworks and do not arbitrarily exclude individuals based on residency alone.

If no law explicitly restricts loans to non-citizen residents, it is important for banks to clarify their policies, avoid misinformation, and uphold principles of fairness and transparency.

As Taiwan continues to foster an inclusive financial system, ensuring that permanent residents are not unfairly excluded from financial services will strengthen the nation’s economic stability and international reputation.