[2020 Financial Services Commission Work Plan] Corporate Credit Review Reorganized Focusing on 'Unified Collateral and Future Growth Potential'

[Asia Economy Reporter Kangwook Cho] The Financial Services Commission (FSC) will completely overhaul the current corporate credit evaluation system, which is focused on real estate collateral and sales performance, to one centered on blanket collateral and future growth potential.

According to the '2020 Work Plan' announced by the FSC on the 19th, the practice of real estate-based collateral will be improved to activate movable property collateral loans, and a blanket collateral system will also be introduced.

To promote movable property and IP collateral loans, the establishment of a movable property and intellectual property recovery support organization will be pursued starting next month. The enhancement of the movable property finance database will also continue.

To activate IP finance, since last month, the Korea Credit Guarantee Fund has been operating a combined product called 'IP Collateral + Guarantee,' which provides additional guarantees to companies that have received IP collateral loans. Furthermore, the range of IP collateral loan products will be expanded within this year. Accordingly, the number of regional banks handling IP collateral and guarantee loans will increase from two last year to five.

Amendments to the Movable Property Collateral Act, including the introduction of the blanket collateral system and the abolition of the collateral right duration limit, will also be pursued.

The corporate evaluation method will change to allow loans and guarantees based on technological capability and future growth potential rather than sales volume. Currently, technology evaluation does not affect loan eligibility but only influences loan interest rates and limits. This will be changed so that technology evaluation can affect not only loan interest rates and limits but also loan eligibility (creditworthiness).

Accordingly, in the second half of this year, a new evaluation system focusing on the technological capability and growth potential of companies in new industries will be operated through a dedicated evaluation organization. Additionally, an integrated technology-credit evaluation credit model will be introduced to enable companies with excellent technology to raise more funds at lower interest rates.

Moreover, the FSC plans to build and provide corporate analysis information such as industry outlook and corporate competitiveness to financial companies to support the evaluation of companies' business capabilities and future growth potential. A commercial credit index will also be established to facilitate financing for companies with good commercial credit, such as payment ability.

In particular, next month, the FSC will announce a reorganization of the financial sector indemnity system so that employees of financial companies can actively support innovative companies.

Innovative finance tasks such as movable property collateral loans, venture capital investment, and regulatory sandbox will be included in the indemnity scope, and through the introduction of a presumption of indemnity system and rationalization of indemnity requirements, the burden of proof on financial company employees will be eased. The presumption of indemnity system means that if there is no private interest and no significant defect in procedures according to laws and internal regulations, it is presumed that there is no intentional or gross negligence. To this end, an indemnity review committee will be established.