Starting Next Month, Revised Technology Finance Guidelines and Three Major Evaluation Manuals to Be Implemented
Starting from the 1st of next month, the technology credit evaluation system will be improved to enable banks and other institutions to accurately assess technology companies. Additionally, quality review and tech evaluations will be strengthened and enhanced.
The Financial Services Commission announced on the 30th that from the 1st, the revised Technology Finance Guidelines and the three major evaluation manuals (technology credit, quality review, and tech evaluation) containing these improvements will be applied and enforced. This is a follow-up measure to the technology finance improvement plan announced last April.
First, the technology credit evaluation will be improved to faithfully assess technology companies. Technology credit evaluation assesses a company's technology (T) and credit (CB), and is currently conducted by six evaluation agencies and ten banks.
The authorities will refine the scope of technology finance to prevent banks from requesting technology finance for non-technology companies such as general clinics and retail businesses. They will also mandate on-site investigations and detailed evaluation opinion reports during technology credit evaluations to ensure thorough assessments of technology companies.
Furthermore, when banks request technology credit evaluations, the head office will randomly assign the evaluation agency to branches, excluding the influence of bank branches on the evaluation agency. To prevent evaluators from giving lenient assessments arbitrarily, minimum quantitative score criteria for each technology credit evaluation grade will be established, and AI technology will be used to provide grade determination guidelines.
In addition, a code of conduct will be added to prevent evaluators from undermining the reliability of technology finance by falsifying investigation data or arbitrarily modifying or manipulating information. Additional improvements include clarifying evaluation procedures raised during the operation of technology credit evaluations, revising professional personnel requirements, and strengthening the code of conduct.
The related system has also been improved to strengthen the discriminative power of quality review evaluations by enhancing evaluation criteria. First, all quality review evaluation judgment criteria will be scored to strengthen the quality review standards. Moreover, excellent evaluation agencies based on quality review results will be given opportunities to participate in policy projects, while for underperforming agencies, the loan balances evaluated by them will be excluded from the Bank of Korea’s financial intermediation support loan system loan balance performance, thereby reinforcing the feedback system. Additionally, when banks allocate evaluation volumes to agencies, they will base the allocation on quality review evaluation results to strengthen incentives for agencies to improve evaluation quality independently.
As the importance of quality review evaluations increases with this reform, the authorities have introduced a right to request re-examination to enhance fairness and further refined the evaluation results from the existing three-tier classification to five tiers, among other improvements.
The tech evaluation system has also been improved to reinforce the original purpose of technology finance. Tech evaluation is a system where the bank’s technology finance performance is assessed by the Credit Information Service and the Financial Supervisory Service and reflected in the contribution rates to the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation. Accordingly, a new indicator for the extent of preferential interest rates provided by banks for technology finance has been added (16 points), and the scoring for credit loans in technology finance has been expanded (from 20 to 24 points), allowing companies with technological capabilities to receive preferential treatment in loan limits or interest rates even if collateral or sales are insufficient.
Additionally, reflecting changes due to the addition of preferential interest rate indicators, the overall scoring of existing tech evaluation indicators has been adjusted, and the weighting of qualitative evaluations has been increased. Other necessary improvements raised during the system operation process will also be pursued.
The authorities stated, "Except for items requiring research services and system development, all these improvements will be implemented starting tomorrow. Quality review evaluations for banks and evaluation agencies will apply from the first half of next year for performance in the second half of this year, and tech evaluations for banks will apply from the first half of next year for this year’s overall performance." They added, "With the implementation of these improvements, the reliability of technology finance will increase, and high-quality technology credit data necessary for building an integrated credit model combining technology evaluation and credit evaluation will be accumulated. We expect that through the qualitative growth of technology finance, financial support for technology companies will be strengthened."
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