Lee Bok-hyun, Financial Supervisory Service Chief, Urges to Avoid Excessive Repayment Burden on Vulnerable Groups

Lee Bok-hyun, Governor of the Financial Supervisory Service / Photo by Jin-hyung Kang aymsdream@

[Asia Economy Reporter Song Seung-seop] On the 4th, Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), held an 'Emergency Risk Inspection Meeting' and instructed to ensure that financially vulnerable groups do not bear excessive repayment burdens.

On this day, Governor Lee held a meeting with the Deputy Governor for Strategy and heads of related departments, emphasizing, "We must actively and meticulously seek a soft-landing plan so that low-income and vulnerable groups do not suffer excessive repayment burdens due to rising interest rates and asset market price adjustments."

Governor Lee explained, "The prolonged Ukraine war and the acceleration of monetary tightening by major countries have worsened external conditions, slowing domestic economic growth. Interest burdens are increasing mainly among vulnerable borrowers such as over-indebted individuals due to rising interest rates, and adjustments in asset prices such as stocks and real estate are occurring."

He continued, "Manage liquidity and soundness risks of individual financial companies caused by borrower defaults and collateral value declines intensively, considering the characteristics of each financial sector," and demanded, "Strengthen monitoring and specify response systems to prevent the risk from spreading to the financial system."

The meeting also reviewed sector-specific issues and default risks. Banks agreed to minimize the possibility of defaults among vulnerable borrowers by improving disclosure of loan-deposit interest rate spreads, activating the interest rate reduction request system, and expanding customized support for vulnerable borrowers. Regarding the foreign exchange market, in preparation for the expansion of external risks, management will be further strengthened for vulnerable financial companies to prevent the emergence of foreign currency liquidity-related weak points.

In the small and low-income sector, voices were raised that credit risk expansion should be prepared for due to the high proportion of vulnerable borrowers. Accordingly, guidance will be given to additionally reserve provisions for household, real estate project financing (PF), and loans to industries sensitive to economic fluctuations to enhance loss absorption capacity.

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