25 September 2003

Dear Sir / Madam,

Guidance Note on Taxi Financing

Pursuant to paragraph (g) of the Guidance Note, we have reviewed the data on the cash-flow position of taxi operators and value of taxi licence submitted by the panel (the "Panel") established under that paragraph and decided that the Maximum Finance Amount (i.e. the loan cap) per taxi licence, as specified in paragraph (a) of the Guidance Note, shall remain at HK$2.25 million. The current loan cap shall therefore continue to be effective until end of December 2003. Other provisions of the Guidance Note remain unchanged.

We would like to point out that while the survey shows that the income of taxi operators has increased in Q3/2003 when compared with Q2/2003, it has still not returned to the level of Q1/2003. Authorized institutions should continue to be prudent in their taxi loan business.

As you are aware, we have recently consulted the Hong Kong Association of Banks, the DTC Association, and the Finance Houses Association of Hong Kong Limited on certain proposed changes to the Guidance Note. We are reviewing the comments received from these Associations and will inform you of our decision in due course.

Yours faithfully,

Y.K. Choi
Executive Director
(Banking Supervision)