The term, "Commercial Bank", as used in this Act shall mean a Bank the principal function of which is to accept Checking Deposits and Demand Deposits and Time Deposits and extend short-term
and medium-term loans.

Businesses which may be conducted by a Commercial Bank are as follows:
1.To accept Checking Deposits;
2.To accept Demand Deposits;
3.To accept Time Deposits;
4.To issue Bank Debentures;
5.To extend short-term, medium-term and long-term loans;
6.To discount bills and notes;
7.To invest in government bonds, short-term notes, corporate bonds, Bank Debentures and corporate stocks;
8.To handle domestic and foreign remittances;
9.To accept commercial drafts;
10.To issue foreign and domestic Letters of Credit;
11.To guarantee the issuance of corporate bonds;
12.To guarantee domestic and foreign transactions;
13.To act as collecting and paying agent;
14.To act as agent to sell government bonds, treasury notes, corporate bonds and stocks;
15.To conduct warehousing, custody and agency businesses in relation to the businesses in the preceding fourteen items subparagraphs; and
16.To conduct other relevant business which may be authorized by the Competent Authority.

The total amount of medium-term loans extended by a Commercial Bank shall not exceed the balance of its Time Deposits received.

A Commercial Bank may issue Bank Debentures and may agree with the holders that such debentures may enjoy the priority over other creditors of the Bank; applicable regulations with respect to issuance and maximum amounts shall be prescribed by the Competent Authority after consulting with the Central Bank of China.

The total amount of loans extended for residential construction and construction for business purposes by a Commercial Bank shall not exceed thirty percent (30%) of the aggregate of such Commercial Bank's deposits and Bank Debentures issued at the time such loans is extended; provided, that the following shall not be subject to such limitation;
1.Housing loans approved by the Competent Authority for the encouragement of savings to purchase private homes;
2.Housing loans which are extended using postal savings deposits which are allocated by the Central Bank of China and redeposited with the bank;
3.Loans extended for purposes of financing purchase of residential construction by use of medium-and long-term funds from the National Development Council;
4.Loans extended for construction for business purposes using medium-and long-term funds from the Development Fund and/or the National Development Council;
5.Loans for purposes of encouraging investment in construction of public housing, loans for purchase of public housing and loans for purchase of residential houses by government employees and teachers.
A maximum amount of the loans under the provisos to the preceding Paragraph may, when necessary, be prescribed by the Competent Authority.

With respect to issuing, buying and selling stocks, a Commercial Bank may extend financing to stock brokers and stock investment companies.
The rules governing such financing shall be as prescribed by the Central Bank of China.

Commercial Banks may apply to the Competent Authority for approval to invest in financial related businesses. The application shall be deemed approved if the Competent Authority does not object thereto within fifteen (15) days after the application is submitted to the Competent Authority; provided, that, until such fifteen (15) day period has elapsed, the Bank shall not proceed with the relevant investment.
Commercial Banks which obtain approval from the Competent Authority to do so, may invest in non-financial related businesses in cooperation with a Government's economic development project; provided, that such Banks shall not be involved in the management of such businesses. An application for approval to make such investments shall be deemed approved if the Competent Authority does not object thereto within thirty (30) days after the application is submitted to the Competent Authority; provided, that until such thirty (30) day period has elapsed, such Bank shall not proceed with the relevant investment.
Investment made pursuant to the two preceding paragraphs shall be subject to the following requirements:
1.The total investment amount shall not exceed forty percent (40%) of the Bank's net worth, and the total amount invested in non-financial related businesses shall not exceed ten percent (10%) of the Bank's net worth.
2.Unless such is in cooperation with a government policy and is approved by the Competent Authority, a Commercial Bank shall not invest in more than one entity engaging in the same line of business; and
3.In the event that a Commercial bank invests in a non-financial related business, the investment shall not exceed five percent (5%) of the total paid-in capital or the total issued shares of such business.
The term, "financial related business", as used in Paragraph 1 and Subparagraph 2 of the preceding Paragraph, shall mean Banks, Bills Houses, Securities Companies, Futures Companies, Credit Card Companies, Financial Leasing Companies, Insurance Companies, Trust Companies and other financial related businesses designated by the MOF. The Competent Authority shall prescribe rules to facilitate the supervision and management of mergers between Banks and invested businesses and prevent conflicts of interest between Banks and invested businesses.
If it becomes obvious that the operation of an invested business could affect the soundness of a Bank's operations, the Competent Authority may order the Bank to dispose of its shares in such invested business within a prescribed period of time.
If, prior to the amendment dated November 1, 2000 becoming effective, the total amount invested in non-financial related businesses exceeds the ratio stipulated in Paragraph 3, Subparagraph 3, a Bank may maintain the original investment amount, provided the Bank has obtained approval of the Competent Authority before complying with the stipulated ratio. For investments in the same business respectively made by two or more Banks prior to their merger, the Banks may maintain their respective original investment amount, provided they have obtained approval of the Competent Authority at the time of applying for merger.

Commercial Banks may invest in securities; the types and limits with respect to the securities which may be invested in shall be prescribed by the Competent Authority.

With the exception of warehousing for business use, a Commercial Bank shall not invest in real estate for self use in an amount in excess of the net worth of such Commercial Bank at the time such investment is made. The amount of a Commercial Bank's investment in warehousing for business use shall not exceed five percent (5%) of the total amount of such Commercial Bank's Deposits at the time the investment in such warehousing is made.
A Commercial Bank shall not invest in real estate other than for self use, unless:
1.A substantial portion of the real estate is for self use;
2.The real estate will be used for self-use in the near future; or
3.A substantial portion of rebuilt original real estate is for self-use.
4.The real estate will be provided for use by a cultural, art or public interest institution or organization established with approval from the competent authority in charge of the institution or organization concerned and the use has obtained approval of the Competent Authority in consultation with the competent authority in charge of the institution or organization concerned.
The total amount of a Commercial Bank's investment in real estate not for self use made in accordance with the exceptions in the preceding Paragraph shall not exceed twenty percent (20%) of a Bank's net worth. The total amount of the Bank's investment in real estate not for self use plus the total amount of Bank's investment in real estate for self use shall not exceed the Bank's net worth at the time of the investment in such real estate.
In the event a Commercial Bank conducts real estate transactions with an entity in which the Bank holds more than three percent (3%) of the paid-in capital, or with the responsible person(s) or staff members or major shareholders of the Bank, or with an interested party of the Bank's responsible person as defined in Article 33-1, the Bank shall do so at arm's length and obtain the consent of more than three-quarters of its directors present at a board meeting at which at least two-thirds of the directors are present.
The scopes of real estate for self use referred to in Paragraph 1, real estate other than for self use, real estate with substantial portion for self-use, for self-use in the near future, or to be rebuilt for self-use referred to in Paragraph 2, the procedure for approval mentioned in Paragraph 2, Subparagraph 4, and regulations governing other compliance matters with respect to bank's investment, holding and disposal of real estate shall be prescribed by the Competent Authority.

Save as permitted by Articles 74 and 75 of this Act, real estate and stocks acquired by a Commercial Bank through the foreclosure of mortgages or pledges shall be disposed of within four (4) years from the date of acquisition.