Seungbeom Ko "Extension of COVID-19 Loan Repayment Moratorium Until March... Plans to Establish Normalization Measures"

Approximately 4 Trillion Won Liquidity to Be Supplied Through Policy Financial Institutions

[Asia Economy Reporter Park Sun-mi] Financial authorities will extend the maturity extension and repayment deferral of COVID-19 loans until March 2022, while simultaneously implementing supplementary measures for an orderly normalization in the future.

On the 15th, at the joint meeting on financial support for small and medium-sized enterprises (SMEs) and small business owners, Financial Services Commission Chairman Ko Seung-beom stated, "Self-employed individuals and small business owners are continuing to face operational difficulties as the spread of COVID-19 worsens again. In particular, SMEs focused on domestic consumption such as food service, lodging, travel, and retail are experiencing increased hardships and are earnestly requesting an extension of support."

Chairman Ko added, "As a result of gathering opinions, there was a consensus that it is necessary to extend the maturity extension and repayment deferral measures once more, while simultaneously implementing supplementary measures for an orderly normalization. We will extend the COVID-19 loan maturity extension and repayment deferral until March 2022 and prepare and implement supplementary measures for an orderly normalization going forward."

First, to ensure that borrowers with repayment deferrals do not face excessive repayment burdens even after the deferral period ends, measures such as granting grace periods and extending repayment periods will be solidified to facilitate a smooth transition. Additionally, to reduce the debt burden for borrowers struggling with repayment before they fall into delinquency, the banking sector's pre-workout system and the Credit Recovery System of the Korea Credit Counseling & Recovery Service will be improved to expand support targets and strengthen assistance such as interest reductions. Furthermore, approximately 4 trillion KRW in liquidity will be supplied through policy financial institutions.

Meanwhile, to respond to the COVID-19 crisis, all financial sectors have participated since April 2020 in implementing maturity extension and repayment deferral measures for SMEs and small business owners. By supporting a total of 222 trillion KRW through July this year, these measures have played a role in securing time for SMEs and small business owners to cope with the impact of COVID-19.

Chairman Ko stated, "However, as these measures have been prolonged, concerns have arisen about the accumulation of repayment burdens for long-term deferred borrowers and the potential for latent insolvency in financial institutions, so we are paying close attention. Financial institutions will be supervised to manage the problem of non-performing loans from deferred repayments thoroughly without any gaps."

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