1. Risk Indicators
Under the Risk-based Premium System, premium rate for individual insured institution is set based on each insured institution's risk level. The risk level is determined on the basis of two risk indicators: capital adequacy ratio (CAR) and Composite Score of the Risk-based Premium Rating System (CSRPRS).

• Determination of  CAR:
  The CAR of banks refers to the ratio of equity capital to risk-weighted assets. The CAR of credit cooperatives refers to the ratio of eligible equity capital to total risk-weighted assets. For local branches of foreign and mainland Chinese banks, the ratio of equity capital to total risk-weighted assets of the foreign and mainland Chinese banks, which report to the supervisory agencies in their home country, is used. The CARs for credit departments of farmers' and fishermen's associations are the ratio of eligible net worth to total risk-weighted assets.

2. Risk Grading
The CAR and CSRPRS are both divided into three risk grades:

• CAR grades: Well Capitalized, Adequately Capitalized, Undercapitalized (for details see the chart)
• CSRPRS grades: Grade A (composite scores of 65.0 and over), Grade B (50.0 to under 65.0), Grade C (less than 50.0)

3. Risk Groups
Nine risk groups are distinguished according to a three-by-three matrix, in which the Y-axis represents the CAR and the X-axis represents the CSRPRS.

4. Deposit Insurance Premium Rates

Five-tiered premium rates are set based on the risk groups of the insured institutions.

• For domestic banks and local branches of foreign and mainland Chinese bank in Taiwan, premium rates are 0.05%, 0.06%, 0.08%, 0.11%, 0.15% of covered deposits. Eligible deposits in excess of coverage limit applied to a flat rate of 0.005%.
• For credit cooperatives, premium rates are  0.04%, 0.05%, 0.07%, 0.10% and 0.14% of covered deposits. Eligible deposits in excess of coverage limit applied to a flat rate of 0.005%.
• For credit departments of farmers' and fishermen's associations, premium rates  are 0.02%, 0.03%, 0.04%, 0.05%, and 0.06% of covered deposits. Eligible deposits in excess of  coverage limit applied to a flat rate of 0.0025%.

See charts on premium rates for each type of insured institution for more details.

5. Standard Dates for Calculation of Risk Indicators

• The CAR is based on the rate of the following dates that insured institutions report to the competent authority (for local branches of foreign and mainland Chinese banks, it refers to the data reported by their parent banks to their own competent authority in their home countries) before the standard date for calculating the deposit insurance premium, which is June 30 or December 31 each year:
  1. Domestic Banks：March 31 or September 30.
  2. Local branches of foreign and mainland Chinese banks：June 30 or December 31 (or the most recent reported data).
  3. Credit Cooperatives：June 30 or December 31.
  4. Credit Departments of Farmers' and Fishermen's Associations：From January 1, 2020, the standard dates are June 30 or December 31 instead of December31.
• The standard dates for calculating the CSRPRS are March 31 and September 30, which are determined as one quarter before the standard dates for calculating deposit insurance premiums (June 30 and December 31). The CSRPRS is generated by the most recent financial data submitted by insured institutions. However, if CDIC, within half year before the standard dates for calculating deposit insurance premiums, receives an examination report of the insured institution with an examination standard date prior to March 31 or September 30 and the examination results are different from the financial data submitted by the insured institution, the insured institution should make adjustments based on the examination results. Accordingly, CDIC should use the data after adjustments made by the insured institution, to generate the CSRPRS and calculate the risk premium rate of the current payment period. If the examination standard date of the abovementioned examination report is after March 31 or September 30, the premium rate for the next payment period should be calculated based on the principle above.

6. Penal Rules

• CDIC sends a written notification of the applicable premium rate to each insured institution. The insured institutions are required to keep such information confidential. If an insured institution violates this rule by publicly announcing their CSPRPS or premium rate, CDIC can legally increase the premium rate of the violators by 0.01%.
• If an insured institution fails to pay its premium on time as stipulated under CDIC regulations, CDIC can legally increase the premium rate of the violator by 0.01%.
• If the insured institutions dishonestly report their financial data or intentionally hide the critical financial data or operational information which may affect the calculation of the premium rates, CDIC can legally charge additional premium rate on the insured institutions by 0.01%~0.04%.

7. Regulations on Appealing a Premium Rate

The insured institutions that object to their differential premium rates are still required to pay the insurance premium on time. A written request for review of the premium rates could be submitted to CDIC between the date of receiving notification of premium payment and the due date of the premium payment (January 31 or July 31, based on the postmark date). Only one such request is allowable per insurance period.

8. Exceptions

• The premium rate for insured institutions that do not have  CSRPRS data or CAR data available due to reorganization, will be based on the latest CSRPRS or CAR before the reorganization.
• The insured institutions that are newly established and do not yet have CSRPRS will pay the Grade 3 premium rate. However, the Grade 4 premium rate must be applied to credit departments of farmers' and fishermen's associations established under special permission by the central competent authority of agricultural finance in accordance with the proviso of Subparagraph 2 of the "Auditing Standards for Applications to Reestablish Credit Departments by Farmers' and Fishermen's Associations whose Credit Department are Assumed by a Bank."
• The premium rate for state owned insured institutions, excluding those institutions subject to the lowest premium rate, will be calculated as one grade lower than the rate applied for their risk group.
• The premium rate for insured institutions that accept deposits but do not make loans other than time deposit pledges or for the deposits required by law to be deposited in certain financial institutions will be determined by the competent authority.
• Insured institutions shall pay the highest premium rate if they are under guidance, superintendence, conservatorship or delegated authority by officers dispatched by the competent authority or the central competent authority of the agricultural finance in accordance with the law.
• Bridge banks which are set up in accordance with the Deposit Insurance Act don't need to pay the insurance premiums.
• If an insured institution receives a warning notice of terminating the deposit insurance agreement by CDIC in accordance with the Article 25 of the Deposit Insurance Act, CDIC can legally charge additional premium rate on the institution by 0.01%~0.05%.
• The calculation of premium rates for insured institutions in the process of a merger or assumption:
  1. For the payment period at the time of a merger or assumption:
     • The calculation of premium rates will be based on the risk indicators of  each individual institution before the merger or assumption.
  2. For the payment period after a merger or assumption:
     • If there is no new CSRPRS, the premium rate is based on the CSRPRS of the surviving insured institution after the merger. The premium rate of the newly-established institution is based on the CSRPRS of the institution whose CSRPRS are the highest among the original institutions before the merger or assumption.
     • If there is no CAR data, the premium rate is based on the CAR of the surviving institution. The premium rate of the newly-established institution is based on the CAR of the institution whose CAR is the highest among the original institutions before the merger or assumption.