Temporary Delinquents Due to COVID-19 Receive 'Credit Amnesty'... Eun Seong-su Says "Special Circumstances Must Be Considered" (Comprehensive)

Financial Authorities Promote Credit Recovery for COVID-19 Delinquent Borrowers with Good Repayment Records

On the 11th, Eun Sung-soo, Chairman of the Financial Services Commission, held a credit recovery support meeting at the Bankers Club of the Korea Federation of Banks in Jung-gu, Seoul, with Kim Geun-ik, Senior Deputy Governor of the Financial Supervisory Service; Kim Kwang-soo, Chairman of the Korea Federation of Banks; Kim Joo-hyun, Chairman of the Credit Finance Association; Jeong Hee-soo, Chairman of the Life Insurance Association; Jeong Ji-won, Chairman of the General Insurance Association; Park Jae-sik, Chairman of the Korea Federation of Savings Banks; Kim Geun-soo, Chairman of the Credit Information Association; Shin Hyun-joon, Director of the Credit Information Center; and Ahn Chang-guk, Head of the Financial Innovation Planning Group at the Financial Services Commission.

[Asia Economy Reporter Jin-ho Kim] Eun Sung-soo, Chairman of the Financial Services Commission, stated on the 11th, "We will help individuals who have defaulted due to the COVID-19 crisis to recover their credit." Considering the special circumstances of COVID-19, he emphasized the need to grant a kind of 'credit pardon' to debtors who temporarily defaulted on loans but have since repaid them.

Chairman Eun made these remarks during a meeting with major financial association heads and reporters after a private breakfast at the Bankers' Hall in Myeong-dong, Jung-gu, Seoul. The discussion focused on credit recovery measures for borrowers who defaulted due to COVID-19-related damages but have repaid faithfully.

He said, "COVID-19 is a rare situation that may occur once in a hundred years," and added, "It is important to stop sharing default information among financial institutions for borrowers who have completed repayment after default."

He further requested, "When calculating credit scores, please refrain from using records of defaults that occurred during the COVID-19 situation."

Based on the meeting, the Financial Services Commission decided to restrict the sharing of default histories and the use of credit evaluation by credit information companies for small defaults by individuals and sole proprietors during the COVID-19 period if the full amount has been repaid. The financial authorities have a precedent of supporting credit recovery by limiting the sharing of small default histories among financial institutions during the IMF foreign exchange crisis.

Additionally, all financial sectors agreed to actively cooperate to ensure smooth implementation of measures such as restricting the sharing and use of default histories in selecting support targets, credit evaluation, and loan screening management. Specific support targets and measures will be announced tomorrow.

Furthermore, the financial authorities will assist to ensure smooth credit recovery support. They plan to implement active exemption measures so that credit evaluation and loan screening results following the above actions do not negatively affect financial institutions' management performance evaluations or internal performance evaluations of responsible employees.

The financial authorities strongly denied concerns that credit recovery support for defaulters might lead to a 'moral hazard.' Chairman Eun stated, "The credit recovery support targets are limited to those who have repaid their loans," and added, "Since support is provided only to those who have repaid, the moral hazard issue is expected to be minimized. We need to consider the pain that defaulters are experiencing."

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