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| Financial Services Commission Chairman Koh Seung-beom, fourth from left, poses with leaders of major financial firms here, at the headquarters of the Korea Federation of Banks in Seoul, Friday. From left are Woori Financial Group Chairman Son Tae-seung, Hana Financial Group Chairman Kim Jung-tai, KB Financial Group Chairman Yoon Jong-kyoo, Shinhan Financial Group Chairman Cho Yong-byoung and NH Financial Group Chairman Son Byung-hwan. Yonhap |
By Lee Min-hyung
Financial Services Commission (FSC) Chairman Koh Seung-beom pledged Friday to consider "possible risk factors" before deciding to extend special loan benefits to self-employed and small business owners directly affected by the pandemic. The decision came during a meeting with the leaders of the nation's major financial firms.
This is the first time that the new head of the financial watchdog has held an official meeting with the chairmen of KB, Shinhan, Hana, Woori and NH Financial Group since he took office, Aug. 31.
The top item on the agenda was whether to extend the deadline for the special financial program under which small business owners have been able to receive loans from banks without paying any principal and interest until the end of September.
The financial authorities have remained in a dilemma over whether to allow small business owners to take advantage of the benefit for another six months to the end of March 2022, as a considerable number of them are on the verge of bankruptcy. Even if the authorities and banks offer such financial benefits, some critics argue that most of them will not be able to pay back the principal and interest even after the pandemic ends.
Koh said the FSC will make a decision on the issue no later than the beginning of the upcoming Chuseok holiday, which starts Sept. 18.
"We are taking various factors into account comprehensively ―such as possible insolvency concerns," he said.
Given the tightened social distancing measures, the banking industry concurs over the need to extend the program, but some officials raised concerns that such "blind support" will not help banks as much as beneficiaries of the program.
"Banks understand the necessity of running such a program, but our general view is that the beneficiaries need to at least pay interest," a financial industry source said. "This is a preemptive measure to identify so-called zombie companies and those who have little chance of survival even after the pandemic."
The FSC chief also urged the heads of the lenders to pay more attention to controlling surging household debt.
"Household debt has increased to a risky level, so financial firms should monitor any possible risk factors before offering loans," he said.
Curbing the surging level of household debt has become a must, not a matter of choice, due to looming financial uncertainties here and abroad ― such as the key rate hike and the U.S. Fed's tapering possibility, according to the FSC chief.
