KAMCO to Purchase 20 Trillion KRW of Individual Delinquent Loans from All Financial Sectors Starting the 29th

[Asia Economy Reporter Kim Hyo-jin] The government will begin the procedure to purchase overdue debt claims from financial companies for individuals struggling due to the novel coronavirus infection (COVID-19) on the 29th. The government plans to purchase bonds worth up to 2 trillion won by the end of June next year.

On the 25th, the Financial Services Commission signed the 'Personal Overdue Debt Purchase Fund Agreement' with Korea Asset Management Corporation (KAMCO), the Credit Recovery Committee, and 10 financial associations at the Korea Federation of Banks in Jung-gu, Seoul.

In April, the government prepared the 'Measures to Strengthen Support for Vulnerable Individual Debtors' at the 4th Emergency Economic Meeting. As a follow-up measure, the Financial Services Commission signed the agreement on this day and decided to implement the bond purchase.

All financial sectors including banks, savings banks, credit finance companies, mutual finance, and insurance agreed under the agreement to refrain from excessive collection on unsecured personal loans that became overdue between February and December this year, and if bond sales are deemed unavoidable for soundness management, to sell bonds only to KAMCO.

The financial sector also agreed to waive overdue interest after bond write-off regardless of whether the bond is sold, to reduce the burden of overdue payments.

Debtors who have applied for debt adjustment through the Credit Recovery Committee but face difficulties due to opposition from financial companies can also request bond purchases from KAMCO.

Once a bond purchase application is received by KAMCO, financial companies plan to immediately stop collection efforts and conclude a bond transfer contract with KAMCO to sell the bonds.

After purchasing the bonds, KAMCO plans to waive overdue interest until the COVID-19 situation ends and suspend active collection such as repayment demands. Additionally, depending on the debtor's income recovery, KAMCO will support rehabilitation through repayment deferral for up to 2 years, long-term installment repayment for up to 10 years, and debt reduction of up to 60%.

Applications for bond purchase can be made online through the OnCredit website (www.oncredit.or.kr) or by visiting one of the 12 regional KAMCO offices nationwide.

Purchases will be made collectively after going through transfer procedures such as bond evaluation for applications submitted during the period or monthly.

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