Yoon Elected President Likely to Announce Customized Support Plans by Week Based on Code Alignment
[Asia Economy Reporter Song Hwajeong] The Financial Services Commission (FSC) is scheduled to report to the Presidential Transition Committee (PTC) on the 25th. The report is expected to cover financial support measures for small business owners and SMEs, as well as the easing of loan regulations related to President-elect Yoon Seok-yeol's financial pledges.
According to the financial sector on the 24th, the FSC plans to conduct the report on the morning of the 25th at the Economic Subcommittee 1 office of the PTC in Tongui-dong. Financial support measures for small business owners and SMEs, household debt management, and loan regulation directions have recently been identified as key issues. Since President-elect Yoon has also pledged related policies, these topics are expected to be the core content of the report.
Earlier, on the 22nd, Ahn Cheol-soo, chairman of the PTC, requested discussions on extending the maturity and deferral of repayments for small business loans. On the 23rd, Ko Seung-beom, chairman of the FSC, held a meeting with heads of financial industry associations and finalized a six-month extension of the maturity and repayment deferral measures. Along with this, plans to prepare customized support measures tailored to each borrower's situation in consultation with the PTC were announced, so related content is expected to be included in the report.
The President-elect's side pledged sufficient maturity extensions for existing loans of self-employed individuals, small business owners, and SMEs; easing of total household loan volume regulations; raising the loan-to-value (LTV) ratio limits; and relaxing the debt service ratio (DSR) regulations for individuals. Additionally, for small debts, the principal reduction rate will be expanded from the current 70% to 90%, and in case of worsening situations, plans to collectively purchase and manage non-performing loans of self-employed individuals were also pledged. An expansion of low-interest loan funds through special guarantees exceeding 5 trillion won was also promised.
There is also interest in what stance the FSC, which has strengthened regulations to manage household loans so far, will take in response to the President-elect's pledge to ease loan regulations. The pledge includes raising the overall LTV to 70% and increasing it to 80% for first-time homebuyers. Currently, the LTV is operated between 20% and 70% depending on whether the area is regulated, house price, and home ownership status.
One of the President-elect's pledges, the expansion of the loan-deposit interest rate spread disclosure system and the results of banks' interest rate calculation system reviews, are also expected to be included in the report. President-elect Yoon proposed the introduction of the loan-deposit interest rate spread disclosure system and stated that if necessary, the appropriateness of the additional interest rate would be reviewed and collusion factors checked. Currently, the Korea Federation of Banks website discloses the base interest rate and additional interest rate of loans monthly, but detailed breakdowns of the additional interest rate are not disclosed. If the loan-deposit interest rate spread disclosure system is expanded, monthly disclosures will be made comparable by bank, and the operational costs that form the basis of the additional interest rate may be disclosed.
Contents related to the Youth Leap Account are also expected to be included in the report. The Youth Leap Account, pledged by the President-elect, is a product where the government supports savings incentives so that young people can accumulate a lump sum of 100 million won over 10 years. Measures to allow subscribers of the Youth Hope Installment Savings, promoted by the current government, to switch to the Youth Leap Account are also expected to be reviewed.
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