Financial Services Commission: "Continuous Monitoring of Increase in Credit Loans and Compliance with Loan Agreements under Actual Demand Conditions"

Son Byung-du, Vice Chairman of the Financial Services Commission

[Asia Economy Reporter Kim Hyo-jin] Sohn Byung-doo, Vice Chairman of the Financial Services Commission, said on the 7th, "We plan to continue close monitoring of the trend in household debt increase, including credit loans."

At the video-hosted 'Financial Risk Response Team Meeting' that morning, Vice Chairman Sohn expressed this stance, stating that alongside continuous liquidity supply to vulnerable sectors, household debt management will be conducted from a mid- to long-term perspective to maintain the solid growth of our economy and manage risks.

He also mentioned, "We will continuously check whether financial institutions are thoroughly assessing borrowers' repayment ability when issuing loans, and also monitor the contract fulfillment status of conditional loans for housing real demand, such as disposal and move-in condition loans."

However, Vice Chairman Sohn evaluated that the surge in credit loans observed until August has somewhat eased thanks to the banking sector's own management efforts.

The increase in credit loans at the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?at the end of last month was about 2.1 trillion won, which is half the level compared to the end of August (4 trillion won). The overall increase in household loans also slightly decreased from 8.4 trillion won at the end of August to 6.6 trillion won at the end of last month.

Vice Chairman Sohn added, "If household loan instability factors persist, we plan to discuss necessary management measures with related government departments."

Meanwhile, regarding the second round of small business loans related to the novel coronavirus infection (COVID-19), which has a limit raised to 20 million won from 10 million won and allows overlapping receipt since the 23rd of last month, Sohn said, "About 350 billion won in loans have been executed within one week after the restructuring, and the interest rate level is gradually decreasing compared to the early stage of the system implementation, which seems to help alleviate small business owners' financial difficulties."

From this month's issuance, the COVID-19 response Primary Collateralized Bond Obligation (P-CBO) will have increased loan limits per company. The limit for mid-sized companies will rise by 35 billion won to 105 billion won, and for large companies by 50 billion won to 150 billion won.

Vice Chairman Sohn also stated, "We will promptly implement follow-up measures related to the Korean New Deal," adding, "Within this year, we will start the selection process for sub-fund managers of the 'Policy-type New Deal Fund' and hold business briefings for each New Deal sector jointly with related government departments."

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