Financial Supervisory Service "Proactive Response to Potential Risks in Supervising Small and Micro Finance"

On the 20th, the Financial Supervisory Service (FSS) announced that it will proactively respond to potential risk factors such as multiple debtors and real estate project financing (PF) in the small and microfinance sector’s financial supervision and inspection tasks this year.

Park Sang-won, Deputy Governor of the FSS, said at the 'Financial Supervision Work Briefing' held in the afternoon with executives and employees from savings banks, specialized credit finance companies, and mutual finance companies in attendance, "We plan to carry out financial supervision and inspection tasks in the small and microfinance sector focusing on proactive responses to crisis situations and changes in the financial environment, as well as creating a warm and fair financial environment."

He added, "While small and microfinance companies faithfully fulfill their fundamental role of providing financial support to low-income and vulnerable borrowers, I ask them to also make efforts in risk management to prepare for internal and external uncertainties."

The FSS stated that it will proactively respond to potential risk factors this year by monitoring household loan handling status using delinquency rate leading indicators and raising the reserve ratio for multiple debtors. It also emphasized that it will identify savings banks and credit finance companies with concerns about deteriorating soundness early through crisis situation analysis and induce prompt financial structure improvements. The FSS said it will support a smooth landing by extending maturity and repayment deferral measures for COVID-19 support bonds and will also seek ways to expand support for Sunshine Loans and mid-interest rate loans.

Regarding internal control, the FSS announced plans to improve systems to prevent financial accidents by strengthening control functions in vulnerable areas such as PF loans of savings banks and used car financing of credit finance companies. In addition, it will eradicate acts that undermine financial order such as improper loan solicitation and incomplete sales of loan and deposit products, and strengthen inspections against unfair and unsound business practices.