Agriculture and fishery associations are allowed to set up credit departments for handling financial businesses if they are approved by the central authorities. The accounting of credit departments should be independent from other departments.

The following matters shall be prescribed by the Central Authorities: permits of establishment and dissolution, business resumption and reorganization, facilities and personnel assignment of the Credit Department and branches, and the limitations, periods, saving ratios and management of other risk control ratios of the Credit Department for various objects of entrustment.
The Credit Department shall establish mechanisms for internal control and audit, and the implementation methods for such mechanisms shall be determined by the Central Authorities.
The business instructions, financing and re-disposition of surplus shall be determined by the Central Authorities after meeting and consulting with the involved institutions.
The Credit Department shall establish internal processing and procedures mechanisms, for the evaluation of asset quality, loss reserve preparation, call on receivables for overdue loans and write-offs of bad loans; and the regulations involved herein shall be prescribed by the Central Authorities.
The standards for the Credit Department in sponsoring the member and non-members, as well as the limitations on the amount shall be prescribed by the Central Authorities.

There should be a chairperson in each credit department and its branches. The central authorities would prescribe the qualifications and conditions of the chairperson.
The general director would have to report the nominee with qualifications and conditions as mentioned in the previous paragraph to the Committee for approval. The chairperson of the credit department would be appointed after obtaining approval from the governing authorities. The process for discharging the chairperson would be the same.
The central authorities regulate the process for appointing and discharging mentioned in the previous paragraph.

If the general director of agriculture and fishery associations, chairperson of credit departments or its branches fails to comply with the law and articles or incorporation or subject agriculture and fishery associations to harm, the central authorities should terminate and discharge the position of the general director or the chairperson of credit departments or its branches.

The operations of the Credit Department are limited to the following:
1. Accept deposits
2. Process loans;
3. Lease the members (or their dependents under the same household) facilities that are necessary for agricultural production or sales;
4. Domestic Remittance;
5. Accept and pay as the agent;
6. Lease safe-deposit boxes;
7. Provide agent services;
8. Perform businesses entrusted by public treasury (both at county and city level);
9. Carry out businesses entrusted by the Agricultural Bank of Taiwan; and
10. Perform any other business approved by the Central Authorities.
With approval by the Central Bank of the Republic of China, credit departments may process simple foreign currency transactions.
The Central Authorities shall adjust its business projects and scopes in accordance with the capital sufficiency, operation performance, financial professionalism, internal control and audit mechanism of the Credit Department. Regulations with respect thereto shall be stipulated by the Central Authorities.
For the surplus funds of the Credit Department, at least three fourths (3/4) shall be re-deposited at the Agricultural Bank of China; however, any other surplus that has been deposited in other financial institutions before the implementation of the revised articles on March 29, 2011, may be deposited in such financial institution.
The Credit Department shall apply to the Agricultural Bank of Taiwan for its financing in advance, with the exception of an emergency and the approval from the Agricultural Bank of Taiwan is required.

Credit departments should set up a Credit Examination Committee. Its members should be employees who possess experiences in investigating credit information proposed by the board of governors, approved and appointed by the board of supervisors.
For credit cases that require resolutions by the board of governors or those that are within the governing powers of supervisors of credit departments, approval should first be obtained from the Credit Examination Committee before requesting approval from the board of governors or supervisors of credit departments.
Governors and members of the Credit Examination Committee who are interested parties of the credit examination cases should not participate in the case examinations.
Examination of credit cases that are above certain limits from the credit departments should be reported to the Agricultural Bank of Taiwan for approval or transferred to the Agricultural Bank of Taiwan for processing.
The central authorities regulate the fund limit mentioned in the previous paragraph.

Article 5 to Article 8-1, Article 12 to Article 15, Article 22, Article 32 to Article 43, Article 45-2, Article 48, Article 49, Article 51, Article 55 to Article 57, Article 61-1 to Article 62-4, Article 62-9 and Article 76 of the Banking Act shall apply mutatis mutandis to the management of the Credit Department, unless otherwise provided by this Act.

The credit department should maintain the ratio of net value to risk capital at a certain level. The central authorities would regulate the methods for calculating its range, processing the minimum ratio and processing ratios that have yet reached the minimum.

After annual resolutions, credit departments should allocate at least 50% of its reserves as legal reserves for credit departments. For those with ratios of net value to risk capital that is lower than the ratio mentioned in the previous article, all of the reserves should be allocated as legal reserves for the credit departments.

For credit departments that are mismanaged and attain cumulative losses that are over one-third of the net value resolved by credit departments from the previous year, or those with overdue loan ratios of 50% or more, the central authorities and Agricultural Bank of Taiwan would set up counseling teams to assist them in reorganization.
The term for counseling as mentioned in the previous paragraph is 3 years. For credit departments that could not attain the set improvement goals at the end of the term, or those that are identified as non-performers by the counseling unit, the central authorities would order its governing agriculture or fishery association to be merged with other agriculture or fishery associations with credit departments. It cannot be applied to Article 37 of Agriculture Association Act and Article 17 of Fishery Association Act.
For credit departments with negative net values, the Financial Reconstruction Fund by the Executive Yuan would make up the gap for the credit department during its existence. After that, the central authorities would order its governing agriculture or fishery association to be merged with other agriculture or fishery associations with credit departments. It cannot be applied to Article 37 of Agriculture Association Act and Article 17 of Fishery Association Act.

In case that the Credit Department is not able to repay a debt or the depositors’ interests may be endangered, arising from a worsening business or financial condition, the Central Authorities shall terminate all the agents authority of the Representatives, the Directors, Supervisors or General-Director of the Farmer’s and Fishermen’s Association or the part hereof towards the Credit Department, Article 45, 46 of the Farmers’ Association Act and Article 48, 49 of the Fishermen’s Association Act shall not be applied; and the terminated power may be fulfilled by the appropriate representatives appointed by the Central Authorities.
In case the finance reconstruction funds of the Executive Yuan need to be used, the Central Authorities may, fulfill the rights prescribed in the preceding paragraph and order the Farmer’s and Fishermen’s Association that comprises the Credit Department to merge with other Associations comprising an established credit department, and Article 37 of the Farmer’s Association Act and Article 39 of the Fishermen’s Association Act shall not be applied.

In case that the order, made by the Central Authorities pursuant to paragraphs 2, 3 of Article 36 and the preceding article, of the merger between the Farmer’s and Fishermen’s Association that comprises the Credit Department and other Associations comprising an established credit department is difficult to achieve, the Central Authorities may take one of the following measures without application of Article 37 of the Farmer’s Association Act or Article 39 of the Fishermen’s Association Act:
1. Order the Farmers’ and Fishermen’s Association to transfer their Credit Departments to other Farmers’ and Fishermen’s Association that already have credit departments.
2. Order the Farmers’ and Fishermen’s Association to transfer their Credit Departments to the Agricultural Bank of Taiwan.
In case that the Agricultural Bank of Taiwan receives the Credit Departments in accordance with Subparagraph 2 of the previous paragraph, the Bank may retrieve the shares without being subject to Paragraph 1 of Article 167 of the Company Act; and the retrieved shares shall be sold within six (6) months. Any unsold shares hereunder shall be considered as unissued shares and shall be registered for alteration.
When the Agricultural Bank of Taiwan, pursuant to Subparagraph 2 of Paragraph 1, receives the Credit Departments, paragraph 1 to paragraph 4 of Article 185, Article 186 to Article 188 of the Company Act shall not be applied.

When the Central Authorities, in accordance with Paragraph 2, 3 of Article 36, Paragraph 2 of Article 37, or paragraph 1 of the preceding Article, order the Farmers’ and Fishermen’s Association to merge or convey the Credit Department, the ordered or receiving Associations or the Agricultural Bank of Taiwan shall, upon the registration of alteration, transfer or assignment of movables, intellectual property right and all other security interests of such Associations, apply for alteration, conveyance or assignment, of such Associations shall apply for the subparagraphs authority in accordance with the following regulations without any charge, together with documents issued by the Central Authorities about such merger and conveyance.
1. Stamp taxes and deed taxes arising from such merger or conveyance shall be exempted.
2. The conveyed securities shall not be charged tax arising from security transaction.
3. Any and all conveyed goods or personal services shall not be charged to the extent of sales tax.
4. In case that the Farmers’ and Fishermen’s Association is ordered to merge or convey its Credit Department and the land shall be transferred therefore together, the Association, after the present value of the land is examined and confirmed according to Land Tax Act, shall process with the registration for transferring the land ownership, and the payable land value increment tax may be deferred and paid upon its re-transferring by the Association or the Agricultural Bank of Taiwan. Upon bankruptcy or dissolution, the deferred land value increment tax shall be paid on a priority basis.
5. Any land accepted by the Associations as stated above according to Article 76 of the Banking Act referred in Article 33 hereunder, the land shall be exempted from charging land value increment tax upon being transferred or conveyed to the Association or the Agricultural Bank of Taiwan.
6. Any goodwill arising from such merger or conveyance shall, upon the declaration of the income tax will be amortized within fifteen (15) years.
7. Expenses arising from such merger or conveyance shall, upon the declaration of the income tax will be recognized within ten (10) years.
8. Losses arising from merger or sale of nonperforming loans shall, upon the declaration of the income tax will be recognized as losses within fifteen (15) years.
When the Farmers’ and Fishermen’s association or the Agricultural Bank of Taiwan merges or receives the credit department stipulated in the preceding paragraph, the notification of transferring a credit may be made by way of public notice, and the debts may be accepted without recognition by the creditors. Article 297 and 301 of the Civil Code shall not be applicable.