The Credit Union's Asset Management Company will be able to acquire bad loans from financial institutions. This is expected to establish a systematic foundation for the swift resolution of non-performing loans held by credit unions.
On August 27, the Financial Services Commission announced that it would propose amendments to the 'Lending Business Supervision Regulations' by October 6.
The key aspect of this amendment is the inclusion of the Credit Union Asset Management Company as an institution eligible to acquire bad loans. This measure aims to facilitate the effective management and acquisition of non-performing loans, following the establishment of the Credit Union Asset Management Company under the revised Credit Union Act in April.
Currently, the Lending Business Act restricts the transfer of loan receivables to only those institutions specified by law to prevent illegal collection practices and other related issues. Registered lenders, credit finance institutions, public institutions, and agricultural cooperative management companies are currently permitted to acquire bad loans.
Once the amendment is implemented, credit unions will also be able to sell their non-performing loans to dedicated institutions, enhancing their financial health. The Credit Union Asset Management Company is expected to take on the role of acquiring and managing the non-performing loans held by individual credit unions.
The Financial Services Commission plans to collect public feedback by October 6 and implement the revised regulations in line with the enforcement date of the amended Credit Union Act on October 22.
* This article has been translated by AI.
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