Lee Bok-hyun "Debt relief for delinquent borrowers is a necessary measure, not reverse discrimination"

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Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), recently emphasized that the 'win-win finance' plan involving debt forgiveness for overdue loans in the banking sector is not reverse discrimination against ordinary borrowers but a necessary measure in the current situation. He stated that this is a repeated measure during economic downturns each year and includes steps to prevent moral hazard, making it essential to prevent the collapse of ordinary self-employed individuals.

On the 17th, Governor Lee made these remarks during a meeting with reporters after the announcement event of Shinhan Card's win-win finance plan held at Shinhan Card headquarters in Jung-gu, Seoul. He explained, "(The program where banks forgive overdue debts) is already limited to vulnerable borrowers or those who have a sincere intention to repay, and it operates on the premise of at least 1% interest or principal repayment to prevent moral hazard," adding, "It is actually a necessary relief measure for those like self-employed individuals whose sales are irregular and who may be overdue for 2 to 3 months."

He drew a clear line against recent controversies over reverse discrimination related to the banking sector's overdue debt forgiveness programs. Recently, DGB Daegu Bank, Woori Bank, Saemaeul Geumgo, and others have introduced support measures such as waiving overdue interest or reducing principal for individuals, sole proprietors, and small and medium-sized enterprises.

He refuted the notion that these measures are used merely as part of financial companies' overdue loan management. Governor Lee stated, "Financial companies or institutions conducting 'debt forgiveness feasts' for their own benefit, such as managing overdue loans, have a different nature from win-win finance and need to be checked," emphasizing, "(The reverse discrimination controversy) is a mixed discussion at present, but balanced win-win finance and excessive debt forgiveness by financial companies should be viewed separately."

He also mentioned the preparation of detailed guidelines for best practices to improve bank governance, which will be introduced in the second half of this year. The FSS launched a joint task force (TF) on the 14th to work on CEO appointment and management succession procedures, outside director evaluation systems, and internal control system improvements. Governor Lee hinted that these guidelines could be applied as early as to KB Financial Group, which is about to undergo the next chairman appointment process. He urged, "(The guidelines) should minimize any influence on specific individuals or candidates," but added, "Since this is the first event (next KB Financial chairman appointment) following various governance issues at the end of last year and early this year, I hope KB Financial will set a pioneering precedent."

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