Additional 1.2 Trillion KRW in COVID-19 Financial Support... Expansion of Bank Consignment 업무 Scope (Comprehensive)

700 Billion Special Guarantee, PCBO Expanded to 2.2 Trillion
Bank Entrusted Scope Expanded for Document Submission and Other Tasks

Sehun Lee, Director of the Financial Policy Bureau at the Financial Services Commission, is explaining current issues related to the COVID-19 financial sector response at the joint briefing room of the Government Seoul Office Building on the 10th. (Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] The government will provide an additional 1.2 trillion won in financial support to small and medium-sized enterprises (SMEs) affected by the spread of the novel coronavirus infection (COVID-19). In response to concerns about delays in the loan procedures for guaranteed loans from regional credit guarantee foundations, the government has decided to expand the scope of tasks entrusted to banks to accelerate the loan process.

According to financial authorities on the 10th, based on the supplementary budget for COVID-19 response, the government plans to newly support 700 billion won in special guarantees for SMEs affected by COVID-19. The support scale for new issuance of company bond-backed securities (P-CBO), which helps SMEs and mid-sized companies raise funds, will also increase by 500 billion won from the initially planned 1.7 trillion won to 2.2 trillion won.

This reflects feedback from the field that support programs for SMEs are relatively insufficient compared to support for small business owners. The government also plans to promptly execute a 4.5 trillion won facility investment boom-up program and a 3 trillion won industrial structure advancement program.

Regarding concerns that 70-90% of funding applications from COVID-19 affected companies are concentrated on guaranteed loans from regional credit guarantee foundations, causing delays in guarantee screening, the financial authorities will expand the current scope of bank-entrusted tasks such as loan document reception, preparation guidance, and on-site inspections, and will deploy retired personnel from policy financial institutions to assist.

Lee Se-hoon, Director of the Financial Policy Bureau at the Financial Services Commission, held a briefing on COVID-19 financial sector response at the Government Seoul Office briefing room on the same day, stating, "Currently, only some foundations entrust tasks to banks within a limited scope, but we are discussing with the Ministry of SMEs and Startups to expand the scope of tasks to include the screening process," adding, "The Ministry of SMEs and Startups will announce detailed plans soon."

Additionally, financial authorities plan to continuously encourage frontline branches to implement relaxed credit screening guidelines prepared at headquarters to ensure smooth financial support from private financial companies to COVID-19 affected SMEs and small business owners.

This includes determining interest rates and limits based on a 'three-step' credit rating upgrade, uniformly extending the maturity of loans due within four months by six months without screening, and making support decisions at the branch manager's discretion (as in the case of Shinhan Bank).

From March 3 to 6, financial authorities conducted telephone checks on the execution status of financial support for COVID-19 damage with policy financial institutions such as IBK Industrial Bank, Korea Credit Guarantee Fund, Small Enterprise and Market Service, regional credit guarantee foundations, as well as private financial companies including KB Kookmin Bank, Woori Bank, Shinhan Bank, Hana Bank, and savings banks.

On April 4, Eun Sung-soo, Chairman of the Financial Services Commission, conducted an on-site inspection at the IBK Industrial Bank Gongdeok-dong branch, which has a particularly high volume of small business loans, and the Korea Credit Guarantee Fund Mapo branch.

According to financial authorities, most financial company branches have dedicated counters and staff performing tasks, and headquarters distribute COVID-19 related consultation manuals, indicating generally proactive responses.

Financial authorities plan to actively disseminate exemplary response cases to other financial companies and swiftly seek various improvement measures through daily emergency meetings and financial sector response review meetings.

Meanwhile, financial authorities reported that after reviewing the 'Business Continuity Plans (BCP)' of financial infrastructure institutions and financial companies, including alternative site operations and remote access system operations, they found that these entities are responding promptly to emergency situations.

This content was produced with the assistance of AI translation services.