Kim Juhyun, Financial Services Commission Chairman, "Further Extension of Maturity and Repayment Deferrals Could Cause Bigger Problems"

[Asia Economy Reporter Song Hwajeong] Kim Juhyun, Chairman of the Financial Services Commission, emphasized that extending the maturity extension and repayment deferral measures for vulnerable groups, which are scheduled to end at the end of September, could cause bigger problems, and that active roles from financial companies are needed to resolve this.

On the 14th, at a briefing related to the 2nd Emergency Economic and Livelihood Meeting held at the Government Seoul Office, Kim Juhyun said, "Since the maturity extension and repayment deferral have already been extended four times, extending them again could lead to bigger problems," adding, "Financial companies must take responsibility to understand the credit status of their customers who are borrowers and help them where possible."

Chairman Kim stated, "The basic flow of small business support measures includes three things: debt restructuring worth 30 trillion won, refinancing from high interest rates to low interest rates, and support for new business funds," and emphasized, "There may be ambiguous areas not covered by government measures, so financial companies need to provide answers for these parts."

Kim also said, "In preparation for the end of maturity extension and repayment deferral at the end of September, we have formed a team with the Financial Supervisory Service to create a system to determine whether it is possible to end these measures early, and we plan to resolve this in harmony with what banks do independently."

Regarding the actual potential risk of non-performing loans, Kim said, "I understand that the Financial Supervisory Service is carefully monitoring this mainly through financial institutions," and emphasized, "Once a loan becomes non-performing, there are only two options: liquidation or rehabilitation. The maturity extension point should help borrowers rehabilitate if possible, allowing them to create a repayment plan suited to their situation."

On the topic of the Safe Conversion Loan, Kim explained, "The interest rate level of the Safe Conversion Loan is based on the Bogeumjari Loan, with a basic preferential system applied to reduce the rate by 30bp (1bp = 0.01 percentage points), and an additional 10bp reduction for low-income youth," adding, "As of July, the Bogeumjari Loan interest rate ranges from 4.2% to 4.8%, so with preferential benefits applied, the effective rate is expected to be in the low 4% range. Although rates are rising and will likely be higher in September when applied, considering the loan interest rates of commercial banks, this will be very helpful." He further added, "Usually, early conversion or refinancing incurs early repayment fees, but this refinancing loan does not charge fees, so it will be practically beneficial."

Regarding support for the youth, he explained that it is necessary to reduce future cost burdens. He said, "The 2030 generation is the core of the future, and if we do not proactively provide them with opportunities to recover early, the cost our society will have to bear later will be much greater," emphasizing, "Not only the 2030 generation but also support for vulnerable groups must be properly provided for a sustainable and healthy society."

Chairman Kim concluded, "This measure is the first step in new support under a new environment," and emphasized, "We will supplement problems that arise during the operation process and discuss expanding the support targets and scale in consultation with the political sector."

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