Held Inflation Special Committee Today to Discuss Measures
Long-term Installment Repayment Up to 20 Years
Demanded Financial Sector to Reduce Loan-Deposit Margin
Semiconductor Special Committee Holds First Meeting Today
[Asia Economy Reporters Hyunju Lee, Hyunji Kwon] The People Power Party has demanded that the financial sector share the burden by reducing the interest rate spread between deposits and loans to ease the inflation burden on ordinary citizens. The party and government also agreed to prepare measures to extend loan maturities, reduce interest rates, and provide principal reduction benefits for small business owners struggling with debt.
On the 28th, Seong Il-jong, chairman of the People Power Party’s Policy Committee, attended a meeting of the Special Committee on Price and Livelihood Stabilization and requested direct cooperation from the financial industry. Chairman Seong said, "I earnestly ask for voluntary participation to prevent a concentration of interest rate spreads," and added, "Please discuss whether those who have taken out loans are bearing excessive interest and whether they are adapting well to the crisis and cooperating." This reflects the need for consideration from the financial sector as the rapid rise in the base interest rate to curb inflation leads to increased interest burdens on vulnerable groups.
Ryu Seong-geol, chairman of the Price Stabilization Special Committee, also said, "Interest rate hikes pose difficulties for financially vulnerable borrowers," and emphasized, "We need to take practical measures to ease their burden even slightly."
At the meeting, the Price Special Committee reviewed with financial authorities the possibility of extending debt maturities to support vulnerable groups. In response to concerns that excessive burdens might provoke resistance from the financial sector, Representative Yoon Chang-hyun, who attended the meeting, said in a phone interview, "Since inflation is largely influenced by the aftermath of the Ukraine war, we should first proceed with debt write-offs and maturity extensions linked to this, and then gradually return to normal."
Financial authorities reportedly presented specific plans at the meeting. The Financial Services Commission reportedly reported detailed plans for operating the ‘Small Business New Start Fund (tentative name),’ which would allow small business loans to be repaid in installments over up to 20 years to ease the principal and interest repayment burden. They also proposed adjusting loan interest rates to the level of medium-credit borrowers to prevent excessive interest burden increases due to rising rates, and implementing principal reductions of up to 90% for non-performing borrowers’ credit debts. A Financial Services Commission official said, "We will make maximum use of the safe conversion loans included in the supplementary budget and monitor principal and interest repayments through the vulnerable groups task force."
The People Power Party’s Semiconductor Special Committee, chaired by independent lawmaker Yang Hyang-ja, also held its first meeting on the same day. At the meeting, Representative Yang announced that future meetings would focus on ▲ regulatory reform ▲ tax credits ▲ talent development. In her opening remarks, Representative Yang emphasized, "Once the National Assembly convenes and the parliamentary special committee is formed, we will prioritize urgent legislation." Song Seok-jun, vice chairman and People Power Party lawmaker, said in a phone interview, "Although it is a party special committee, it is a committee that includes the private sector," and added, "We will also consider forming a new type of meeting that could be used for cooperation, including with the Democratic Party, by gathering opinions on whether it can be used for bipartisan cooperation."
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