Extension of SME Loan and Repayment Deferral... 1Q Policy New Deal Fund No.1 Established (Comprehensive)

"Strengthening Soundness Management for Potential Risks in Non-Bank Financial Institutions"
"Closely Monitoring Possible Increase in Stock Market Volatility"
"Preparing Household Debt Management Measures within Borrowers' Repayment Capacity in 1Q"

Deputy Chairman Do Gyu-sang of the Financial Services Commission is conducting a Financial Risk Response Team meeting via a non-face-to-face video conference at the Government Seoul Office Building on the 26th.

[Asia Economy Reporter Kwangho Lee] The government is considering extending loan maturities and interest repayment deferrals again, as well as soft-landing measures, to support small and medium-sized enterprises (SMEs) struggling due to the impact of the novel coronavirus disease (COVID-19). Additionally, it plans to prepare the first investment project for the policy-type New Deal Fund within March.

Do Kyoo-sang, Vice Chairman of the Financial Services Commission, chaired the 33rd Financial Risk Response Team meeting at the Government Seoul Office and discussed these matters.

First, the government will push for the re-extension of loan maturity extensions and interest repayment deferrals for SMEs and small business owners, which are set to expire at the end of March. The loan scale for SMEs and small business owners at the four major domestic banks is about 408 trillion won, with approximately 1.84 million borrowers, indicating that difficulties remain significant.

Vice Chairman Do stated, "It seems inevitable to re-extend temporary financial support measures such as maturity extensions and repayment deferrals for SME loans," adding, "We will prepare soft-landing measures to ensure that umbrellas are not taken away when it rains." He continued, "The government will faithfully implement the '175 trillion won +@ livelihood stabilization package program' to actively resolve the difficulties faced by small business owners and SMEs affected by COVID-19."

The government also plans to accelerate efforts so that the first investment project of the policy-type New Deal Fund can be launched within March. Vice Chairman Do said, "The proposal submission for sub-funds of the policy-type New Deal Fund, which aims to raise up to 4 trillion won, closes today," and added, "We expect the first investment project of the policy-type New Deal Fund to emerge within March." The Financial Services Commission will proceed with full-scale screening and fund formation work.

It was also decided to improve macroprudential soundness of non-bank financial institutions. The Financial Services Commission has been promoting institutional improvements in response to the increase in non-bank financial intermediation within the financial system. These include regulations on cash asset holding ratios in the RP market implemented in June last year and the establishment of a comprehensive real estate exposure management system in December. Going forward, the Commission plans to continue strengthening soundness management against potential risks such as increased capital inflows into the real estate sector.

Vice Chairman Do also urged monitoring of stock market volatility. He expressed, "Although the stock index is on the rise due to increased inflows of individual investors' funds into the stock market, there is always the possibility of increased volatility due to domestic and international factors such as the direction of global fiscal and monetary policies and the progress of COVID-19, so we will closely monitor the financial market situation."

He added, "Efforts to manage and supervise household and corporate debt will also continue," and mentioned, "We plan to prepare household debt management measures within the first quarter to establish a practice where household loans are handled within the borrower's repayment capacity."

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