The measures being extended include employee exemptions related to funding supply, restructuring, and liquidation, as well as allowing separate classification of asset soundness when supplying new funds. The extension also covers the recognition of repurchase agreements (RPs) in the insurance sector and the relaxation of limits on securities holdings related to savings banks' PF. However, three regulatory easing measures concerning the financial investment sector were excluded from this extension.
The government reaffirmed its policy that new funds must be smoothly supplied to normal businesses. In the first quarter, new project financing issuance reached 16.8 trillion won, a 50% increase compared to the same period last year. As of the end of March, PF exposure stood at 169.8 trillion won, a decrease of 4.5 trillion won from the previous quarter.
However, the delinquency rate for PF loans at the end of March rose to 4.65%, an increase of 0.77 percentage points from the previous quarter. Concerns remain about the potential spread of insolvency, particularly among small and medium-sized businesses in regional areas, due to high interest rates and costs. Critics argue that the extension of regulatory easing may delay the resolution of struggling businesses.
The government assessed that the pace of restructuring and liquidation has somewhat slowed since the end of the year and stated, "We will encourage performance improvement to prevent new insolvencies from becoming prolonged."
* This article has been translated by AI.
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