Eun Sung-soo "Decision on COVID Loan Maturity Extension Around August" (Comprehensive)

"Strengthening of DSR in Secondary Financial Sector Not Yet... Will Monitor Further"

Financial Services Commission Chairman Eun Sung-soo is delivering the keynote speech at the COVID-19 Response Financial Policy Evaluation Symposium held at the Bankers' Hall in Jung-gu, Seoul, on the 6th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Jin-ho Kim] Eun Sung-soo, Chairman of the Financial Services Commission, stated regarding the COVID-19 loan maturity extension and interest repayment deferral measures set to expire in September, "We will observe the situation for about a month until the end of August and then decide whether to extend them."

According to financial authorities on the 29th, Chairman Eun, after visiting the Lotte Card Namdaemun Call Center in Jung-gu, Seoul, to inspect the implementation of quarantine measures in the financial sector the previous day, told reporters, "If the COVID-19 Delta variant is contained by August, we will end the measures as planned in September, but if not, there is a possibility of an additional extension," adding, "It won't be too late to discuss it after observing for about a month."

Chairman Eun also said, "Even if the measures end, we will ensure that borrowers do not feel an individual burden," and added, "We are discussing with banks to present programs suitable for individual borrowers."

Regarding criticism that financial authorities have put a brake on Shinhan Financial Group's quarterly dividends, he explained, "We are currently in the process of exchanging views," and "From the authorities' standpoint, it is considering that COVID-19 is not completely over."

On strengthening the Debt Service Ratio (DSR) for the secondary financial sector, he responded, "There are no plans yet." Chairman Eun said, "We do not intend to change the system uniformly at this time," and added, "We will review the numbers in July and August, and if it goes too far, we may take action, but we hope to achieve this year's household loan target without going that far."

During his on-site visit that day, Chairman Eun also expressed concern about the increase in loans in the secondary financial sector. He emphasized, "The rapid increase in loans in the secondary financial sector is worrisome. Please adhere to the household debt growth rate target set at the beginning of the year," and "Please refrain from loan competition exploiting regulatory arbitrage between financial sectors." This is interpreted as expressing concern over the fact that borrowers are increasingly taking loans from banks and then borrowing more from savings banks or card companies, which have more loan limits under the DSR criteria, due to higher loan interest rates in the secondary financial sector compared to banks.

Furthermore, Chairman Eun directly inspected the implementation of quarantine measures in the financial sector following the application of the new Level 4 social distancing in the Seoul metropolitan area. He said, "All financial sectors, including the card industry, must strictly comply with core quarantine rules and actively participate in preventing the spread of COVID-19," and added, "Even in the severe quarantine situation, please maintain the functions of key financial infrastructure according to the business continuity plan to prevent any gaps in financial services to the public."

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