FSC to Invest 30 Trillion Won Annually, Full-Scale Promotion of Productive Finance Starting Next Year

Financial Services Commission Introduces New Financial System Changes for the New Year

On December 30, the Financial Services Commission introduced the "Financial System Changes Starting in the New Year," outlining major financial policies to be implemented from next year, including the full-scale promotion of productive finance, improvements to capital market systems, easing the financial burden on low-income groups, and helping young people build seed money.

First, to actively promote productive finance, the Commission announced that starting next year, it will provide 30 trillion won annually through the National Growth Fund to support the entire ecosystem related to advanced strategic industries.

To curb the excessive concentration of funds in the real estate market and promote productive finance, the minimum risk weight for mortgage loans in the banking sector will be raised from the current 15% to 20% starting January 1. The Capital Markets Act, which introduces Business Development Companies (BDCs)-listed public funds that primarily invest in venture and innovative companies-will also take effect on March 17 to further support productive finance.

Improvements to Ensure Fairness in the Capital Market

Measures to improve fairness and transparency in the capital market will also be implemented. From next year, if a listed company holds treasury shares amounting to 1% or more of its total issued shares, it will be required to disclose its treasury share holdings and disposal plans twice a year. If there is any discrepancy between the previously disclosed disposal plan and the actual disposal status, the reason must also be disclosed.

It will become mandatory to disclose details of serious industrial accidents-including the circumstances, damage, response measures, and outlook-in business and semiannual reports. Starting in March, to enhance information on executive compensation, companies will be required to include total shareholder return (TSR) and operating profit figures alongside the total executive compensation in business and semiannual reports.

Measures to reduce the financial burden on low-income groups will also be implemented. From next year, mutual finance companies, like banks and other financial institutions, will only be allowed to charge actual costs incurred when processing loan repayments, as part of a revised early repayment fee system. In addition, banks will be prohibited from including various statutory expenses, such as contributions to guarantee funds, in the additional interest rate when calculating loan interest rates.

From the second quarter, bank agency services will be introduced, allowing people in areas without bank branches to access face-to-face banking services at locations such as post offices.

A comprehensive one-stop support system will also be established to ensure that a single report of illegal private lending results in the immediate cessation of illegal debt collection, blocking of fraudulent bank accounts and phone numbers, referral to law enforcement, appointment of debtor representatives, and legal remedies. The illegal private lending prevention loan program will also be restructured, with the effective interest rate significantly reduced from the current 15.9% to the 5-6% range.

Death Benefit Securitization Products to Be Launched by All Life Insurers

All 19 life insurance companies will launch "death benefit securitization products," which allow a portion of the death benefit from whole life insurance policies to be used as retirement funds.

Financial transactions under the names of deceased individuals will be blocked more quickly. The current monthly sharing of deceased persons’ lists will be shortened to daily sharing, aiming to prevent accidents and disputes caused by identity theft and to minimize harm to financial consumers.

Payment convenience for minors will also be improved. From next year, the age limit for card issuance and usage limits for minors will be expanded, allowing them to enjoy a cashless payment environment.

In June next year, the Youth Future Savings Account-a tax-free installment savings product that provides government contributions to the amount saved by young people-will be launched. The monthly contribution limit is 500,000 won, and with a three-year maturity and a maximum government support rate of 12%, participants can receive a lump sum of over 20 million won at maturity.