Korea Development Bank Eases Restrictions on Financial Support for Overseas Infrastructure Contracts

Announcement of Amendment to the Loan Business Act Allowing Foreign Financial Companies to Acquire Foreign Currency Loan Claims Only for Foreign Corporations of Licensed Financial Institutions

The Financial Services Commission will ease the loan claim transfer regulations under the Loan Business Act to remove constraints on overseas infrastructure orders and financial support by domestic policy financial institutions such as the Korea Development Bank. To this end, it announced on the 27th that it will promote an amendment to the Loan Business Act.

This is a follow-up measure to the overseas infrastructure order activation strategy jointly announced by related ministries in August last year. It allows only foreign financial companies "established under foreign laws and engaged in financial business abroad" to acquire foreign currency loan claims to foreign corporations of credit financial institutions.

Under the current Loan Business Act, the transfer of loan claims under loan contracts is basically prohibited to prevent indiscriminate distribution and collection of loan claims. Exceptions are made for transfers to entities designated by Presidential Decree and those announced by the FSC (such as purchase collection agencies and credit financial institutions).

Accordingly, domestic policy financial institutions such as the Korea Development Bank find it difficult to sell these loan claims to foreign financial companies (local headquarters and branches) after overseas infrastructure orders and financial support through syndicated loans. This has acted as a constraint on active overseas infrastructure orders and financial support.

The amendment allows foreign financial companies to acquire foreign currency loan claims to foreign corporations of credit financial institutions (offshore foreign currency loan claims of domestic branches and foreign currency loan claims of overseas branches) only.

Yoo Jae-hoon, Director of the Financial Consumer Bureau, said, "Regarding this regulatory easing measure, the financial authorities will actively support overseas expansion and investment expansion so that our financial industry can expand its scope and create new sources of revenue."

The amendment to the Loan Business Act is scheduled to be announced for legislative notice from the 27th to the 16th, and after that, it is expected to be implemented after the resolution of the Financial Services Commission in June.

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