"Corona Damage Business Loan Support Results in 230 Billion Won Bank Interest Income"

[Asia Economy Reporter Kangwook Cho] It has been revealed that commercial banks earned interest profits amounting to 230 billion KRW through the Financial Intermediary Support Loan (FISL), whose limit was increased by the Bank of Korea to support small and medium-sized enterprises (SMEs) and self-employed individuals affected by COVID-19.

On the 3rd, Seong Il-jong, the opposition party whip of the National Assembly’s Political Affairs Committee from the People Power Party, announced that after comparing and analyzing the Bank of Korea’s support interest rate and commercial banks’ loan interest rates on the 10 trillion KRW FISL provided to companies affected by COVID-19, 16 commercial banks earned 234.4 billion KRW in profit from the interest rate difference.

The FISL is a system where the Bank of Korea supplies funds at ultra-low interest rates to encourage banks to expand loans for SMEs and self-employed individuals.

This year, the Bank of Korea increased the FISL support from the usual scale of 25 trillion KRW to 35 trillion KRW to assist companies and individual business owners affected by COVID-19, and last month decided to increase it by an additional 8 trillion KRW, as about 80% or approximately 28 trillion KRW had been disbursed by the end of August.

Additionally, in March, the Bank of Korea lowered the FISL support interest rate from 0.75% per annum to 0.25% per annum.

According to the analysis of the 10 trillion KRW FISL loan status after the limit increase by Representative Seong’s office, the bank that earned the most profit from the FISL was Industrial Bank of Korea (IBK). Of the 4.4 trillion KRW loaned to companies affected by COVID-19 this year, IBK received a total of 2.5 trillion KRW in support from the Bank of Korea. In this process, IBK was supported by the Bank of Korea at an interest rate of 0.25% per annum but executed loans to companies at an interest rate of 2.91% per annum. Through this, IBK’s interest income reached 67 billion KRW.

The banks argue that this reflects the risk of affected companies, but Representative Seong points out that even considering this, the interest rate difference of 2.7 percentage points is excessive.

Representative Seong stated, “All economic actors are sharing the burden due to COVID-19, but it is not socially responsible for banks alone to secure their own profits,” and emphasized, “Regarding the additional 8 trillion KRW limit increase, banks should prioritize the purpose of supporting companies affected by COVID-19 over profitability and set loan interest rates at an appropriate level when providing loans.”

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