Financial support measures for the novel coronavirus infection (COVID-19), such as extending the maturity of loans for small businesses and SMEs, will be extended for another six months. Koh Seung-beom, chairman of the Financial Services Commission, decided to extend the fourth period, but emphasized that he would find an ‘orderly exit strategy’ to prepare for the potential insolvency of the self-employed.
Chairman Koh held a meeting with the heads of commercial banks at the Bank Hall in Jung-gu, Seoul on the 28th and said, “We have agreed to extend the loan maturity extension and repayment deferral measures for another six months in sympathy with the difficulties of the self-employed and respecting the opinion of the National Assembly.”
The loan maturity extension and interest repayment deferral measures for small business owners and SMEs were extended three times by six months and were scheduled to end at the end of March. However, the extension was decided due to the spread of the Omicron mutant virus and pressure from the politicians ahead of the presidential election. From April 2020 to November last year, the total financial sector’s COVID-19 loan support amounted to 272.2 trillion won. Specific extension plans will be announced in mid-to-late March.
Chairman Koh met with reporters after the meeting and emphasized, “If we have focused on overcoming the crisis of self-employment, now we need to pay attention to solving the problem of accumulated self-employment debt.”
“There was also talk about how to plan an exit strategy (at the meeting). We will not only continue to extend the extension, but also analyze the financial and business situation of the self-employed and prepare customized measures for each borrower.” It is interpreted to mean that the government will prepare for the insolvency of the self-employed loans that will accumulate due to the extension of the financial support policy.
Chairman Koh also announced that he has begun a complete reorganization of the Financial Industry Act, including the Banking Act and the Insurance Business Act, to support the digital transformation of the financial sector. He said, “We are reviewing key systems by operating the ‘Financial Business Act Revision Task Force (TF)’ for digital transformation of financial companies.”
Reporter Shin Ji-hwan jhshin93@donga.com