SEOUL, Feb. 9 (Korea Bizwire) — Banks will be encouraged to keep the loans they extended to small business owners and merchants until the date of maturity without withdrawing them all at once, even when such businesses are shut down, South Korea’s financial regulator said Monday.
The Financial Services Commission (FSC) announced that such a measure was discussed during last week’s meeting of the Financial Development Review Committee.
Previously, when small business owners and merchants that were issued loans guaranteed by the Korea Credit Guarantee Fund (KODIT) were shut down, the KODIT took measures such as provisional seizure, while the bank concerned withdrew the loan all at once.
This is because the KODIT law limits the entities that are qualified for the guarantee to those doing business.
The problem is that despite the increase in the number of small business owners and merchants who are forced to shut down due to the COVID-pandemic, some cannot close their businesses, primarily due to the burden of paying all of the loans in full at once and thereby having more difficulties.
Taking these factors into consideration, the FSC decided to improve the system towards eliminating the need for small business owners and merchants who shut down their businesses to repay all of their loans at once, as long as they have no problem paying the principal and interest.
This measure is scheduled to be enforced temporarily during the period from February 15 to September 30.
Lina Jang (email@example.com)