Extension of 8 Financial Regulation Relaxation Measures Including LCR and Loan-to-Deposit Ratio Until March Next Year

[Asia Economy Reporter Park Sun-mi] Reflecting the ongoing support for the real economy by the financial sector through maturity extensions and repayment deferrals due to the continued impact of COVID-19, liquidity and loan-to-deposit ratio regulations in the banking, insurance, savings banks, credit finance, and mutual finance sectors will be temporarily extended until the end of March next year.

On the 29th, the Financial Services Commission and the Financial Supervisory Service decided at a regular meeting to extend the deadlines for 8 out of 25 financial regulatory relaxation measures. As the maturity extension and repayment deferral for loans to small and medium-sized enterprises and small business owners in the financial sector are extended until March next year, related regulatory relaxation measures will also be extended.

The regulatory relaxation measures extended until March next year include ▲easing of the consolidated Liquidity Coverage Ratio (LCR) for banks ▲easing of the foreign currency LCR ▲postponement of the application of the loan-to-deposit ratio for banks ▲postponement of the application of liquidity ratio for savings banks and credit finance companies ▲postponement of the application of loan-to-deposit ratio for savings banks and mutual finance ▲postponement of the application of mandatory loan ratio within the business area for savings banks ▲temporary easing of liquidity evaluation standards for insurance companies. Additionally, ▲the adjustment of risk weights for personal business loans will be extended from the original deadline of the end of September to the end of this year.

The easing of credit provision limits between subsidiaries within financial holding companies, which was originally set to expire in September this year, was judged to have a low need for extension and will not be extended further. Also, the postponement of the application of the Net Stable Funding Ratio for the Korea Development Bank, which is valid until June next year, will be reviewed later as there is still time remaining.

Financial Services Commission Chairman Ko Seung-beom explained the background by stating that, as efforts by the financial sector to support the real economy, such as the extension of maturity and repayment deferral measures, continue recently, the government has decided to extend the regulatory relaxation measures related to enhancing the financial sector’s support capacity until March next year. He also said that the extension of regulatory relaxation measures will be thoroughly managed and supervised regarding their impact on financial market stability and the soundness of financial companies.

Chairman Ko said, "After March next year, we will actively consider the orderly normalization of regulatory relaxation measures by comprehensively taking into account the normalization level of maturity extension and repayment deferral measures, quarantine and economic conditions, and financial market conditions," adding, "When normalizing regulations, we plan to gradually raise regulatory levels to avoid market shocks."

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