Taipei- A Taiwan banking consortium on Tuesday agreed to cut the interest rate on its loan to the Taipei High-Speed Rail Corp (THSRC), which has gone into the red.

The banking consortium has agreed to cut the interest rate on its loan to the THSRC from 8.1 to 4.59 per cent, Broadcasting Corp of China (BCC) reported, apparently after being persuaded to do so by the government.

The reduced rate can help the THSRC to save 1.4 billion Taiwan dollars (45 million US dollars) annually in interest, BCC said.

But the interest cut cannot solve the THSRC's financial problems, so the company still hopes to obtain loans from foreign banks to pay off loans from the Taiwan banking consortium, BCC said.

Taiwan's high-speed railway was built with Japanese technology to cut the travel time between the capital Taipei and the second largest city, Kaohsiung, a major international port in the south.

The 345-kilometre track cost 5 billion US dollars to build, and trains can travel at a maximum 300 kilometres per hour on it.

The high-speed rail began operation on February 1, 2007, and has been luring passengers away from the airlines, but it is 53.5 billion Taiwan dollars in the red due to the high interest rates on its loans from the consortium and a depreciation in the value of its assets. (dpa)