The Financial Supervisory Service Launches Inspection on Solar Power Loan Defaults

[Asia Economy Reporter Song Hwajeong] As issues of illegality and poor management in the solar power promotion projects during the Moon Jae-in administration are expanding, the Financial Supervisory Service (FSS) has begun to assess the status of potential loan defaults related to solar power. It is expected to proceed with a full-scale inspection, including a comprehensive survey.

According to the financial sector on the 21st, the FSS has started to identify the scale, types, and soundness of solar power loans at various banks.

An FSS official stated, "Since problems such as defaults on solar power-related loans have been raised, we are assessing the current status, including the loan scale," adding, "This is a preliminary step for inspection, and depending on the results of the status assessment, we will proceed with an inspection."

Recently, the Office for Government Policy Coordination released an investigation result showing that 261.6 billion KRW was improperly loaned or paid out in the Power Industry Infrastructure Fund project promoted to activate solar power generation during the Moon Jae-in administration. The Ministry of Trade, Industry and Energy has also launched a full survey, expanding concerns over poor solar power loans. Kim Joo-hyun, Chairman of the Financial Services Commission, indicated during the National Assembly’s Legislation and Judiciary Committee meeting yesterday that "we will closely cooperate with the FSS to handle this," suggesting an upcoming inspection. Chairman Kim responded this way to People Power Party lawmaker Kang Min-guk’s remark that comprehensive management and supervision are necessary for the large-scale solar power loans executed during the Moon Jae-in administration. In response to People Power Party lawmaker Yoon Chang-hyun’s inquiry about the potential large impact if solar power loans become non-performing, Kim said, "I will discuss with the FSS. If defaults occur, it is an issue that the FSC must pay attention to as it is intertwined with various economic conditions."

According to data received by lawmaker Yoon Chang-hyun’s office from the FSS, total solar power loans amount to 5.6088 trillion KRW, of which 5.3931 trillion KRW were made during the Moon Jae-in administration. Since the new government took office, solar power loans have amounted to only 83.4 billion KRW. During the Moon Jae-in administration, KB Kookmin Bank had the largest amount of solar power loans at 1.739 trillion KRW, followed by Jeonbuk Bank with 1.483 trillion KRW.

The number of loans exceeding collateral value in solar power loans was 12,498 cases, totaling 1.4953 trillion KRW. Jeonbuk Bank had the highest number of collateral-exceeding cases at 6,007, with an amount of 477.9 billion KRW. Loans exceeding collateral value mean that the appraised value of the collateral is lower than the loan amount, which can lead to non-performing loans. Regarding solar power loans, unsecured loans numbered 365 cases, totaling 309 billion KRW. Shinhan Bank had the most with 337 cases and 298.4 billion KRW.

Lawmaker Yoon stated, "The reason for the large number of loans exceeding collateral is suspected to be due to the high purchase price of electricity through Korea Electric Power Corporation (KEPCO) and the possibility of changing the designation of collateral such as rice paddies and forest land to miscellaneous land after installing solar power plants," adding, "An explanation is also needed as to why Jeonbuk Bank and others handled solar power loans using collateral located outside their business areas, such as in Gangwon Province."

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