Approval of 29 Savings Banks as OnTu Business Institutional Investors
Cumulative Designated Services 355 Cases... 8 Cases Extended
The long-standing wish of the online investment-linked finance industry (On-tu-eop) to attract investments from domestic financial institutions will become possible. In the second half of this year, 29 savings banks are scheduled to execute linked investments for On-tu-eop personal credit loan borrowers.
On the 24th, the Financial Services Commission held a regular meeting and newly designated 30 services, including the 'linked investment for On-tu-eop personal credit loans,' as innovative financial services. With this, a total of 355 services have been designated as innovative financial services to date. Among the previously designated innovative financial services, 8 have had their designation periods extended.
The 29 savings banks participating in linked investments must verify whether the reliability of the personal credit evaluation models held by On-tu-eop operators has been objectively proven. After linked investment, the borrower's repayment ability must be assessed using the same standards as general credit, and soundness classification and post-management procedures must also be established.
Additionally, savings banks must maintain the linked investment balance at an amount less than 10% of the total credit extended or 60 billion KRW (for savings banks with equity capital of 100 billion KRW or more, 100 billion KRW), whichever is smaller. They are also required to submit monthly reports to the Korea Federation of Savings Banks on matters related to linked investment handling, such as the amount of linked investment, delinquency rates, and asset soundness status. If social controversies arise or the delinquency rate exceeds 15%, linked investments will be restricted until the issues are resolved.
This linked investment service is expected to be implemented in the second half of this year after contract signing and system development. Savings banks will strengthen their business base by securing new sales channels, and On-tu-eop operators will be able to secure new funding sources. From the perspective of financial consumers, access to finance is expected to improve as loans can be obtained at relatively low interest rates.
Furthermore, on the same day, the Financial Services Commission newly designated the 're-securitization service for covered bonds issued by financial companies' by the Korea Housing Finance Corporation as an innovative financial service. This service allows the Korea Housing Finance Corporation to purchase and re-securitize covered bonds issued by financial companies for the purpose of supplying long-term, fixed-rate mortgage loans, which is expected to activate long-term mortgage products. The 'domestic stock fractional trading support service' by the Korea Securities Depository and others had its designation period extended by two years.
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