Laws and Regulations Database of the Central Bank of the Republic of China(Taiwan)

Ｉ.　　General Provisions

1.The Central Bank of the Republic of China (Taiwan)(hereafter referred to as "the 
　Bank") has prescribed these Directions for the purpose of governing electronic 
　interbank funds transfer and settlement.

2.The term "Interbank funds" as referred to in these Directions shall mean
　deposits in the following accounts opened at the Department of Banking of the
　Bank:
　(1) Bank funds- reserve accounts A.
　(2) Other financial institution funds.
　Funds in internal operating accounts opened at the Department of Banking by the
　Bank's various units will be deemed "interbank funds" as referred to in the
　preceding Paragraph.

3.The term "Electronic Interbank Funds Transfer and Settlement Operations" as 
　referred to in these Directions shall mean the use of the "CBC Interbank Funds 
　Transfer and Settlement System" (hereafter referred to as "CBC Interbank Funds 
　Transfer System") established by a computer connection between the Bank and the 
　following institutions approved by the Bank in order to carry out transfers and 
　settlements of funds:  
　(1) Financial institutions.  
　(2) Clearing Institutions.
　The term “Clearing Institutions” as referred to in the second subparagraph of 
　the preceding paragraph shall cover clearing institutions for the clearance of 
　checks, electronic payments and securities.
　The term “Securities” as referred to in the preceding paragraph shall include 
　bills, bonds and stocks.

4.The term "clearance" as referred to in these Directions shall mean the process 
　of transmitting and processing payment instructions or securities exchange 
　instructions between financial institutions and calculating the resulting 
　net-credit or net-debit positions.

5. The term "settlement" as referred to in these Directions shall mean the procedures 
　 by which the Bank credits or debits designated accounts to eliminate the
　 debtor/creditor relationship, based on net credit or net debit positions as per 
　 payment instructions or securities exchange instructions between financial 
　 institutions.
　 Settlements may be effected by means of one of the following methods:
　 (1) Real-time gross settlement: payment instructions will be settled in real time 
　　　 on a transaction by transaction basis.
　 (2) Deferred net settlement: payment instructions will first be offset against 
　　　 each other and performed at designated times based on the resulting net credit 
　　　 and net debit positions.
　 (3) Other methods of settlements approved by the Bank.

6.The term "Clearing Systems" as referred to in these Directions shall mean the systems for 
　carrying out the clearance of checks, electronic payments or securities between financial 
　institutions.

7.The term "Online institutions" as referred to in these Directions shall mean
　institutions performing operations online through the "CBC Interbank Funds 
　Transfer System" referred to under Direction 3.

8.The term "Transferor bank" as referred to in these Directions shall mean an 
　institution making an outward transfer of interbank funds; "transferee bank"
　shall mean an institution receiving an inward transfer of interbank funds.

8-1. The term “securities settlement funds transfer” as referred to in these 
　Directions shall mean transactions in which securities firms entrust a 
　designated bank to transfer settlement funds to Clearing Institutions by using 
　the CBC Interbank Funds Transfer System or in which Clearing Institutions 
　transfer settlement funds to the bank designated by securities firms by using the 
　CBC Interbank Funds Transfer System.

 
8-2.The term “credit card settlement funds transfer” as referred to in these Directions
　　shall mean transactions in which issuers of credit cards or the designated banks by 
　　issuers transfer payables to Clearing Institutions or in which Clearing Institutions 
　　transfer receivables to acquirers or the designated banks by acquirers by using the 
　　CBC Interbank Funds Transfer System.

9.Interbank funds account balances fall into the following two categories:
　(1) Book balance: refers to the resulting book amount after a transaction has
　　　been executed and completed; if the book balance is negative, it indicates
　　　intraday overdraft.
　(2) Available balance: refers to the total of book balance plus intraday
　　　overdraft granted by the Bank.
　　　The term "intraday overdraft" as referred to in the preceding Paragraph 
　　　shall mean advances that the Bank provides to interbank funds accounts of
　　　financial institutions during daily business hours in accordance with the  
　　　"Directions for the Conduct of Intraday Overdrafts of the Central Bank of
　　　the Republic of China (Taiwan)"; the term "intraday overdraft limit" refers
　　　to the intraday overdrafts credit that the Bank grants to a financial 
　　　institution as per application in accordance with the said Directions.

10.The term "queuing mechanism" as referred to in these Directions shall mean an
　 operating mechanism, in case the available balance of a financial institution 
　 is insufficient to cover the payment specified in payment instructions, through
　 which the Bank may base on the nature of transactions to assign them a class of
　 priority and place them in the queue for processing, where they will be executed
　 in order as soon as the available balance becomes sufficient for the deduction
　 of payment.

11.Participants in the Clearing Institutions’ Clearing Systems (hereafter referred to as 
　 "Participant Entities") shall be limited to the following institutions: 
　(1) Financial institutions required to deposit reserves under the Central Bank of the 
　　　Republic of China (Taiwan) Act.  
　(2) Securities firms approved under the Securities and Exchange Act that have applied 
　　　to participate in the securities clearing system in accordance with Clearing 
　　　Institutions operating rules.  
　(3) Other financial institutions or government bodies approved by the Bank.

12.Interbank fund transfer transactions fall into the two following categories:
　 (1) Real-time transfer: refers to a transaction that shall be executed
　　　 immediately at the time it is received.
　 (2) Forward transfer: refers to a transaction that is held pending acceptance 
　　　 and shall be executed at the designated time.
　 The forward transfer as refrred to in the preceding Paragraph shall mean a 
　 transaction that the transferor bank may initiate a payment instruction to be
　 executed on any business day within one year following the initiating date.

13.Interbank funds settlement operations refer to the following operations:
　 (1) Payments of negotiable instruments.
　 (2) Settlements of net debit and net credit positions from the exchange of
　　　 bills.
　 (3) Settlements of net debit and net credit positions through electronic payment
　　　 or securities clearing system.

14.The interbank funds inquiry services shall allow online institutions to inquire
　 about transaction details, account balances and other related information at any
　 time during business hours.

15.Real-time transfers of interbank funds and encashments for negotiable
　 instruments presented shall be executed only if the available balance at an
　 account is sufficient for payment.

16.Online institutions shall use the "CBC Interbank Funds Transfer System" in 
　 accordance with the relevant Directions of the Bank.

Ⅱ.　　Application and Management

Section 1:　　Financial institutions

17.Financial institutions participating in the "CBC Interbank Funds Transfer 
　 System" shall first submit by mail two copies of the "Application for 
　 Participation in the CBC Interbank Funds transfer and Settlement System" 
　 (Form 1) to the Department of Banking of the Bank.

18.After the Bank has issued a letter of approval, the institution shall proceed with the 
　 following preparatory measures: 
　 (1) Designation of staff responsible for an operation plan. 
　 (2) Drafting a schedule for the implementation of the online operation plan. 
　 (3) Preparation of hardware and software for online operations as per specifications of the 
　　　 Department of Information Management of the Bank.
　 (4) Application to arrange online operation tests in accordance with testing plan outlined 
　　　 by the Department of Information Management of the Bank.
　 (5) Consultation with the Department of Information Management of the Bank on other matters 
　　　 relating to the establishment of online connections.

19.A financial institution shall become an online institution when the Department of 
　 Information Management of the Bank has confirmed the completion of error-free tests; the 
　 Department of Banking of the Bank will notify the official date for the commencement of 
　 operations.
　 The Department of Banking of the Bank will notify all other online Institutions when an 
　 institution becomes a new online institution in accordance with the preceding Paragraph.

20.An online institution shall appoint the following employees to perform work set 
　 forth in these Directions:
　 (1) One operations director and one deputy operations director, responsible for
　　　 assigning duties, security control and connections with 
　　　 the Bank.
　 (2) A team of two to ten authorized transmission staffs, responsible for the 
　　　 verification and transmission of various fund transfers and corrections, as
　　　 well as deposit, pledge, and cancellation of collateral.
　 (3) A certain number of data entry personnel, responsible for entering fund
　　　 transfer data, corrections, and information for inquiries.
　 No personnel may concurrently serve in both the authorized transmission and data
　 entry positions, nor can personnel in either of these two positions undertake 
　 security control.

21.An online institution shall submit the title, name, service unit, telephone
　 number, and sample seal impression of the designated operation director and
　 the deputy operation director referred to in Direction 20 in writing to the
　 Department of Banking of the Bank; the same procedure shall be followed at 
　 the time of any change in the above positions.
　 The operation director referred to in the preceding Paragraph shall be issued 
　 a user ID and an initial password by the Department of Banking of the Bank,
　 for the exclusive purpose of canceling the registrations of authorized
　 transmission personnel. The operations director shall himself/herself transfer
　 the user ID and password when a new operation director assumes the position.

22.An online institution shall compile and submit the titles, names, and service
　 units of all authorized transmission personnel referred to in Direction 20 to
　 the Bank in writing to apply for the issuance of an individual user ID and
　 initial password for each employee; the said user ID and password shall be 
　 cancelled when an authorization is revoked.
　 Authorized transmission personnel issued with individual user IDs and passwords 
　 as specified in the preceding paragraph and the second paragraph of preceding 
　 Drection shall access the "update user password" field at an online 
　 institutions' workstation to change their passwords.
　 Where authorized transmission personnel leave the institution or are transferred 
　 to another post, cancellations of user IDs and passwords for such personnel 
　 shall be carried out by the online institution operations director by accessing 
　 the "cancel authorized transmission personnel" field on the online institution's
　 workstation.

23.In carrying out the procedures regulated under these Directions, all online 
　 institutions shall establish rigorous security control and instruction manuals
　 in order to prevent abuse.

Section 2:　　Clearing Institutions

24.A Clearing Institution applying to the Bank to handle settlement of net credit or net 
　 debit positions of the Participant Entities shall submit a letter with the following 
　 documents attached for the Bank's approval:   
　 (1) A license or document showing the competent authority's approval for 
　　　 establishment.   
　 (2) The articles of institution.   
　 (3) The institution's operating rules.   
　 (4) A description of its clearing system (including computer hardware and software, 
　　　 network structure, security control, and business continuity plan).   
　 (5) A corporate governance statement: including ownership structure, composition of 
　　　 the board of directors /supervisors, powers and responsibilities of the management 
　　　 and the board of directors, checks and balances for decision making (such as
　　　 internal control improvement, risk management and audit system) and mechanisms 
　　　 which make the management responsible for its performance (such as business goals 
　　　 and how to achieve such goals, how to disclose the achievement of goals to the 
　　　 shareholders, users and the competent authority on behalf of public interests).   
　 (6) A commitment to abide by these Directions and other relevant provisions.   An 
　　　 application will be rejected if any of the documents listed in the preceding 
　　　 paragraph or information required therein is incomplete. An application will also 
　　　 be rejected if the incomplete documents or information are not supplemented within
　　　 a specified time period.

25.The operating rules referred to under Subparagraph 3, Paragraph 1, Direction 24,
　 shall include the following:
　 (1) Standards for the review and acceptance of Participant Entities.
　 (2) The rights and obligations existing between Participant Entities and between 
　　　 Participant Entities and Clearing Institutions.
　 (3) Items of business and operating hours.
　 (4) Settlement methods, times, and operational flows.
　 (5) Risk management measures for payment and settlement.
　 (6) Procedures for dealing with errors or negligence in the transmission of 
　　　 payment information.
　 (7) Disaster preparedness measures.
　 (8) Other matters related to information exchange between financial 
　　　 institutions.

26.The Bank may withhold approval when a Clearing Institution applying to handle
　 settlement lacks any of the following qualifications:
　 (1) Sound and effective operating rules.
　 (2)Transparency in information sufficient to allow Participant Entities to 
　　　understand related risks and responsibilities.
　 (3) Clear risk management procedures.
　 (4) An system designed to ensure the smooth completion of each day's settlement
　　　 procedures.
　 (5) Fair and open standards for participation.
　 (6) Security and back up measures to ensure the stability of operations.

27.The risk management procedures of a Clearing Institution applying to the Bank 
　 to employ deferred net settlement procedures shall include the following:
　 (1) Risk limit: including the establishment of a bilateral credit limit between 
　　　 Participant Entities and maximum net-debit limit for each Participant Entity.
　 (2) Risk collateral: including the standardization of guarantees or collateral 
　　　 items to be deposited by Participant Entities and a mechanism for shared 
　　　 distribution or liability for loss.
　 (3) Follow-up procedures: including procedures for the completion of clearance 
　　　 after the occurrence of the risk event and for sharing any loss.

27-1.Where a Clearing Institution needs to open a special settlement account at the Bank, 
　　 it shall apply in the same manner as stated in Direction 17 stated after the Bank 
　　 has agreed to handle settlements of net credit or net debit positions between the 
　　 Participant Entities.
　　 The special settlement account mentioned in the preceding paragraph is used only for
　　 a Clearing Institution’s intraday payments or receipts of settlement funds, and the
　　 balance at the end of the day shall be cleared.  If the balance has not been 
　　 cleared, the Bank may list such balance as other payables temporarily to match with 
　　 the ledger -closing of the CBC Interbank Funds Transfer System.

28.A Clearing Institution may apply to the Bank for using the "CBC Interbank Funds Transfer 
　　System" to carry out real-time interbank funds settlement for the following payment 
　　transactions :
　 (1) Electronic fund transfers for transactions above a specified amount.
　 (2) Securities transactions settled with delivery-versus-payment.(3) Foreign exchange 
　　　 transactions involving a foreign currency and New Taiwan Dollar settled with 
　　　 delivery-versus-payment. The specific amount for transactions referred to in the first 
　　　 subparagraph of the preceding   paragraph shall be separately prescribed by the Bank.

29.A Clearing Institution shall notify the Bank of any addition to, deletion of,
　 or change in the business matters it handles; in addition, the Bank shall also
　 be notified when there is a change in any item included in the submissions
　 required under Direction 24.
　 Prior approval from the Bank is required before a Clearing Institution, as
　 referred to in the preceding Paragraph, may engage in any of the following
　 acts:
　 (1) Any changes in the Articles of Incorporation or organization;
　 (2) Suspension of business operation;
　 (3) Merger or dissolution;
　 (4) Transfer of the whole or any part of its business or　assets;
　 (5) Acceptance of transfer of another’s business or　assets in whole or in part;
　 (6) Engagement or investment in other businesses;
　 (7) Establishment or closure of a branch office or other business sites; and
　 (8) Other matters as prescribed by the Bank.

29-1.If settlements carried out by the Bank are still required after the merger 
　　 of a Clearing Institution with other institution(s), a merger application,
　　 in the names of such Clearing Institution and other institution(s) jointly,
　　 with the following documents, shall be submitted to the Bank for approval:
　　 (1) merger plan: specifying the preliminary assessment of the decision to
　　　　 merge, the merger organization structure, the scheduled timing for the
　　　　 merger, the description of the business differences (description of
　　　　 differences in scope of business, principles and concrete matters
　　　　 concerning performance before the merger as distinguished from business
　　　　 conduct after the merger as well as the synergy of the merger), Computer
　　　　 system operation models and the impacts on Participant Entities and
　　　　 financial system.
　　 (2) A corporate governance statement： including ownership structure,
　　　　 composition of board of directors /supervisors, powers and
　　　　 responsibilities of the management and the board of directors,
　　　　 decision making process, system of checks & balances, separation of
　　　　 powers (such as internal control improvement, risk management and audit
　　　　 system) and mechanism which make the management responsible for its
　　　　 performance (such as business goals and how to achieve such goals, how 
　　　　 to disclose the achievement of goals to the shareholders, users and the
　　　　 competent authority on behalf of public interests).
　　 (3) A  business continuity plan of system operations (including backup
　　　　facilities, risk management and contingency planning in response to
　　　　different emergency conditions).
　　(4) Other documents as prescribed by the Bank.
　　The institution, whose merger has been approved by the Bank in accordance 
　　with the preceding Paragraph, shall prepare a letter with the relevant
　　documents attached for the Bank's approval to handle settlement.

30.A Clearing Institution shall conscientiously apply a sound system of internal controls and 
　 auditing with respect to check clearance, electronic payments or securities operations 
　 between Participant Entities, and shall attend to improving the assessment of employees' 
　 ethical standards.

31.A Clearing Institution shall provide information online as required by the Bank
　 ; the Clearing Institution shall also prepare statistical statements on a 
　 regular basis for submission to the Bank.

32.The Bank may, whenever necessary, dispatch personnel to inspect business functions with 
　 respect to the clearance of checks, electronic payments or securities between Clearing 
　 Institutions; a Clearing Institution shall cooperate during such inspections.

33.A Participant Entity shall open a deposit account at the Bank or an agent bank
　 designated by the Bank for settlement; provided that if a Participant Entity is 
　 unable to open a deposit account at the Bank or an agent bank designated by the 
　 Bank, such Entity may apply to a Clearing Institution to entrust a Clearing Bank 
　 to use the deposit account at the Bank opened by such Clearing Bank for 
　 settlement.

34.A Participant Entity shall seek to enhance the maintenance and management of
　 computer and information facilities in order to ensure the smooth operation of
　 the system; the Participant Entity shall also adopt concrete and effective
　 safety and back up measures in order to avoid affecting the rights and interests
　 of clients due to system breakdowns or service interruptions.

35.A Participant Entity providing check clearance, electronic payments or securities fund-leg 
　 transfer services for financial institutions may not violate the relevant consumer 
　 protection regulations.

36.If the conduct of a Participant Entity violates these Directions or the operating rules of a 
　 Clearing Institution, resulting in the disruption of clearing systems for checks, electronic 
　 payments or securities, a Clearing Institution may take the necessary measures as warranted 
　 by the particulars of the Participant   Entity's violation.A Clearing Institution shall 
　 clearly set forth the measures referred to in the preceding paragraph in the relevant 
　 agreement between itself and the Participant Entity.

37.If a Clearing Institution's conduct is in violation of these Directions or if the Bank 
　 determines that other matters have disrupted clearing systems for checks, electronic 
　 payments or securities, the Bank may, as warranted by the particulars of the situation, 
　 terminate or suspend for a given period the provision of settlement services or take other 
　 appropriate measures.

Ⅲ.　　Interbank Funds transfer

38.The transferor bank shall initiate the transfer information, with each 
　 transaction order to include the user ID and password of the authorized 
　 transmission personnel, the transferor bank account, the time of the transfer
　 (real-time or forward ttansfer), the transferee bank account, the transfer amount
　 , the date of transfer and the type of transaction. Upon the receipt of the 
　 information, and once the Bank has verified the password and that the authorized 
　 transmission personnel user ID is tallied, the order will be executed as 
　 instructed therein; otherwise it shall be returned.
　 Where a transfer has been effected in accordance with the provisions of the 
　 preceding Paragraph, an online institution may offer no opposition to the
　 transfer on the grounds that the transmission personnel were not those
　 originally authorized, that others assumed their role under pretense, or for
　 any other reason.

38-1.If an interbank fund transfer relates to a securities settlement, it can only 
　　be processed with a real-time transfer. Each instruction shall include the 
　　items prescribed in paragraph 1, Direction 38, and additional information such 
　　as the transferor or the transferee securities firm’s account number, account 
　　name, or code.

39.The Bank may, if necessary, stipulate a minimum amount for each interbank fund 
　 transfer.

40.Once a real-time transfer transaction is accepted by the Bank, the account 
　 transfer will be executed immediately and irrevocably if the available balance 
　 of the transferor bank is sufficient for payment.
　 After the execution, the Bank will simultaneously inform both parties of the 
　 transaction as well as record the resulting book balance.
　 However, if the available balance of the transferor bank is insufficient for 
　 payment, the said transaction shall be alternatively processed through the 
　 queuing mechanism.

41.Once a transaction is accepted by the Bank, if the available balance of the transferor 
　 bank is insufficient for payment, the Bank shall assign one of the following classes 
　 of priority to the said transaction, and process it through the queuing mechanism:
　 (1) First class: Funds payable by the financial institution to the Bank.
　 (2) Second class: Negotiable instruments for clearing payable by a financial 
　　　 institution, the net amount payables for negotiable instruments cleared by the 
　　　 clearing house, securities settlement funds transfers, credit card settlement 
　　　 funds transfers or funds appropriated to the "interbank funds transfer guarantee 
　　　 special account" by the financial institution.
　 (3) Third class: Funds for forward transfers to repay interbank call loans when due.
　 (4) Fourth class: Funds transfers between financial institutions as well as other 
　　　 payments.

42.Payment orders of the same priority stated in Direction 41 shall be executed
　 based on the principle of first-in-first-out. However, if the available
　 balance is insufficient to cover payments for payment instructions of high 
　 priority, the Bank may first execute the payment instructions of a lower 
　 priority, and after completing all payment instructions of the same priority
　 in order, then process payment instructions of the next priority.
　 In case a transferor bank intends to revoke a real-time transfer transaction
　 in queue, or discovers an error in the payment instruction, it may initiate
　 an instruction for revocation.

43.For transactions processed in accordance with the preceding two Directions, 
　 if the available balance is still insufficient for payment towards the cutoff 
　 time of the queuing mechanism, all payment orders remaining in the queue shall
　 be immediately revoked, and the Bank shall simultaneously notify both parties 
　 to the transaction; among the cancelled orders, the negotiable instruments for 
　 clearing and the net amount payable for negotiable instruments clearing for
　 first class and second class shall be processed in accordance with pertinent
　 directions of this Bank.
　 For those transfer transactions revoked as stated in the preceding Paragraph,
　 the Bank may issue a "Certificate of Transfer Transaction Revoked due to 
　 Insufficient Funds" as per transferee bank's application.

44.The forward transfer instruction shall include the transfer date on which the 
　 transfer will be executed. The Bank shall inform both parties of the transaction 
　 in advance upon receiving the instruction, and place it in file. The transfer 
　 shall be executed and posted to the related account at 1:30 in the afternoon on 
　 the designated transfer date; if there is insufficient fund to cover payment of 
　 a forward transfer transaction, it shall be processed through the queuing 
　 mechanism.
　 If the designated transfer date is not a business day, the execution of the 
　 transaction shall be deferred to the next business day.

45.If a transferor bank intends to revoke a forward transfer transaction or 
　 discovers an error in the content of the instruction, it may negotiate with 
　 the transferee bank for initiating an instruction for revocation either on the 
　 transmission date or the designated transfer date.
　 Where the transferee bank in the preceding Paragraph is an offline institution, 
　 it may fill out a "Letter of Authorization for the Revocation of Interbank Funds
　 transfer Transaction" (Format 2) to entrust the Department of Banking of the
　 Bank to revoke the instruction on its behalf.

46.If an offline institution sends its staff bearing negotiable instruments to the
　 Bank to process fund transfers, in all cases the transfers will be processed on
　 a real-time basis. However, if the available balance of the transferor bank is 
　insufficient for payment, it will not be placed in queue and the negotiable 
　instrument will be returned on the spot. 
　The staff sent to conduct the transfer shall wait for the processing result 
　before they leave.

47.In order to avoid the delay of processing payment instructions, the Bank may
　 set up criteria to require the financial institutions to ensure that a certain
　 proportion of their outgoing payments are processed before a specified time 
　 each day.

48. Any fund transfers for open market operations, rediscounting, bond or treasury
　　bill transactions, foreign exchange transactions or other operations between an 
　　online institution and an internal unit of the Bank shall be processed 
　　according to the following provisions. A statement of the fund transfers and 
　　the account balance after settlement shall be provided to the online 
　　institutions.
　　(1) For payments due to the Bank from an online institution, except where other 
　　　　laws or regulations stipulate payment through the issuance of a note with 
　　　　the Bank as the payer, the online institution may transfer funds from its 
　　　　account in the “CBC Interbank Funds Transfer System” to the account 
　　　　designated by the Bank or have a deduction made from its own account by the 
　　　　Bank in accordance with prior agreement.
　　(2) For payments due to an online institution from the Bank, the Bank shall 
　　　　transfer funds into the online institution's account.
　　The provisions in Directions 40 ~ 43 herein shall apply mutatis mutandis to the 
　　situation where a deduction is made from the account of the online institution 
　　by the Bank in accordance with prior agreement as stipulated in subparagraph 1 
　　of the preceding paragraph.

49.Where a transferor bank transmits fund transfer information and fails to 
　 receive a return confirmation from the Bank for an inordinate amount of time,
　 it shall trace the transaction, and where the transaction order has not been 
　 successfully transmitted, the online institution shall retransmit the
　 information.

Ⅳ.　　Interbank Funds Settlement

Section 1:　　Electronic payment and settlement

50.Prior to the stipulated time for settlement, a Clearing Institution shall notify each 
　 participant entity of the net-credit or net-debit positions for verification, and then 
　 transmit the same to the Bank or the agent bank designated by the Bank for the 
　 execution of settlements.
　 In executing settlements as referred to in the preceding Paragraph, all participant 
　 entities with net-debit positions shall supplement those net settlement positions, 
　 after which the Bank or the agent bank designated by the Bank will transfer net-credit 
　 positions into their accounts.
　 A Clearing Institution may transfer funds several times during the daily settlement 
　 period, while transmitting and managing transfers initiated by itself.
　 Where the balance in the settlement account of a participant entity is insufficient to 
　 effect payment of amounts payable, the Clearing Institution shall be responsible for 
　 notifying the participant entity to make up the shortfall.
　 The stipulated time for settlement referred to in Paragraph 1 shall be separately 
　 prescribed by the Bank.

51.Where a participant entity is unable to perform the settlement of debt at the 
　 stipulated settlement time, the Clearing Institution shall perform a 
　 supplementary settlement to complete settlement procedures within the time 
　 stipulated by the Bank as per Subparagraph 4, Direction 26 herein.
　 Neither the Bank nor its designated agent banks shall bear liability for the 
　 compensation of any loss resulting from the inability to complete daily 
　 settlement on time due to the participant entity's delay in the settlement of 
　 net-debit positions.

Section 2:　　Negotiable instruments clearing and settlement

52.Where the available balance of an "interbank funds account" is insufficient to 
　 cover the payment for negotiable instruments presented for clearing, the Bank 
　 shall process the transaction through the queuing mechanism and simultaneously 
　 notify the online institution that issued the said negotiable instruments. The
　 online institution is required to immediately make up the difference upon 
　 receiving the notification.
　 For dishonored negotiable instruments, if sufficient funds are not replenished 
　 by 3:30 in the afternoon, they shall be returned in accordance with pertinent
　 rules.

53.For daily clearance and settlement of negotiable instruments, Participant Entities shall 
　 immediately replenish sufficient funds for payment upon receiving an advance notification 
　 of their balance payable; check clearing institutions shall, at the designated time, deduct 
　the balance payable from the non-interest-bearing reserve account of the Participant Entity 
　and transfer the funds into its settlement account opened at the Bank. 
　The “Designated Time” as referred to in the preceding paragraph shall be coordinated and 
　determined by and between the check clearing institution and the Participant Entity, and 
　reported to the Bank for record.
　Check clearing institutions shall monitor whether any Participant Entity fails to replenish 
　sufficient funds for balance payable, promptly remind and urge such Participant Entity to 
　replenish funds, and keep track of whether the Participant Entity has funds to be 
　transferred in. 
　Check clearing institutions shall not post the balance receivable of a Participant Entity to 
　its non-interest-bearing reserve account until having completed the deduction and transfer 
　procedures in accordance with Paragraph 1 hereof.   
　If a Participant Entity is unable to pay the balance payable in whole or in part, check 
　clearing  institutions shall complete the day’s settlement operation in accordance with 
　Article 18 of the “Regulations Governing the Business of Negotiable Instruments Exchange 
　and Clearance of Accounts among Banks.” 

Section 3　　Securities Funds Settlement

53-1.Paragraphs 1,3,4,5 of Direction 50, and Direction 51 shall apply mutatis mutandis to 
　　 securities funds settlement.

53-2. A Clearing Institution applying to the Bank for settlement of funds under 
　　delivery-versus-payment arrangements for securities transactions in accordance 
　　with subparagraph 2, paragraph 1, Direction 28 shall transmit transaction-by–
　　transaction or the netting balance of each transaction cleared in accordance 
　　with the offsetting mechanism to the Bank for settlements.

Ⅴ.　　Accounting Information Inquiries

54.No further receipts shall be issued for any remittances into interbank funds 
　 deposit accounts following the issuance of a notification through the CBC
　 Interbank Funds Transfer System.

55.Where during the course of operations an online institution has any doubt about
　 the Bank's notices of remittance or payments into or out of interbank funds
　 accounts, it may verify the transaction in question by inspecting an itemized 
　 transaction record.
　 Where an error is discovered through an attempted verification of remittance
　 or payment notices as per the preceding Paragraph, the relevant personnel of 
　 the Bank shall be notified immediately and the matter handled in accordance
　 with the relevant regulations.

56.An online institution shall print out a closing ledger after each daily
　 closing of accounts, and shall verify each transaction individually.
　 Where discrepancies are found, the System User shall immediately notify the
　 Department of Banking of the Bank and jointly track the discrepancy. Where
　 no opposition is offered within three business days beginning from the day
　 after the transaction date, the transaction will be considered confirmed, 
　 except for those handled in accordance with the provisions of Direction 59 
　 or 60 herein.

Ⅵ.　　Handling of Breakdowns

57.Where there is a breakdown or interruption to connections in the Bank's
　 central server system resulting in the inability to carry out online
　 procedures, the Bank may, after the restoration of service, consider 
　 extending the normal period of operations in view of the length of the 
　 interruption and business conditions.

58.If the computer equipment of an online institution breaks down or connections are 
　 interrupted, the user shall notify the Department of Information Management of the Bank and 
　 work out a solution together. The online institution may   not immediately resume use of the 
　 CBC Interbank Funds Transfer System for    transfers of funds, but shall dispatch personnel 
　 to the Bank to carry out transfers in person.

59.When a breakdown of the CBC Interbank Funds Transfer System or an error by 
　 operation personnel results in interbank fund transfers at variance with the
　 original receipts, the Bank will effect correction in accordance with the 
　 relevant accounting regulations. The Bank shall not be liable for any resulting
　 influence on or adjustment of deposit reserves.

60.When an interbank fund transfer initiated by a transferor bank is at variance
　 with the original receipts, the transferor bank shall notify and make 
　 arrangements with the transferee bank to make correction by a reverse transfer
　 or to make adjustments through other means. The transferee bank shall act in 
　 good faith to resolve the situation on the day it receives the notification.

61.Where a transferor bank fails to discover a transaction error as set forth in
　 Direction 60 on the date of the transaction and correction is made at a later 
　 date, and where delay is disadvantageous to the transferee bank, it may request
　 the transferor bank to pay interest from the date of the transaction until the
　 date of correction for the amount receivable pending payment during that time
　 or for any underpayment. The transferor bank shall not be liable for any other
　 damages.
　 The payment of interest as per the preceding Paragraph, except as stipulated by
　 a previous agreement between the parties to a transfer, shall be calculated at
　 the weighted average of the interbank call loan rate for the number of days the
　 payment was delayed.

Ⅶ.　　Fees

62.Consideration may be given to collecting processing or service fees for
　 interbank fund transfers and settlements, with fee rates to be determined 
　 separately.
　 The fees referred to in the preceding Paragraph shall be totaled once a month, 
　 with the Bank making collection through deductions from interbank funds deposit
　 accounts or paid by check from online institutions.

Ⅷ、　　Operation Schedules

63.The CBC Interbank Funds Transfer System shall be in operation from 8:30 a.m. to 6:20 p.m.. 
　 Scheduling of various transactions shall be in accordance with the "CBC Interbank Funds 
　 Transfer and Settlement System Daily Operations Flow Chart" (Appendix).
　 If an online institution is unable to complete the related operations in accordance with the 
　 schedule set in the preceding paragraph and must apply for an extension, the institution 
　 shall do so in accordance with the operating procedures established by the Bank.

Ⅸ、　　Transitional Provisions

64.Where prior to the amendment of these Directions, if a Clearing Institution has
　 used the "CBC Interbank Funds Transfere System" for interbank funds settlement 
　 or used its Electronic Payment System in a manner not conforming to these 
　 Directions, it shall make rectification or adjustments within the time limit set
　 by the Bank.