Starting next year, banks will be limited to providing real estate project financing (PF) that does not exceed 20% of their total credit offerings. This measure aims to prevent excessive concentration of funds in real estate PF and to enhance financial stability.
The Financial Services Commission (FSC) announced on September 30 that it will propose changes to the 'Banking Supervision Regulations' by November 9. This amendment follows the FSC's announcement in December of last year, in collaboration with relevant ministries, regarding measures to improve the soundness of real estate PF. At that time, the government announced plans to introduce limits on real estate PF for banks, securities firms, and insurance companies to mitigate excessive risk exposure and concentration.
The regulation on the credit limit for real estate PF will take effect on January 1, 2027, and banks that exceed the limit at the time of implementation will be granted a three-year grace period to rectify the situation.
Additionally, the amount managed in foreign currency payment accounts will be excluded from the scope of credit offerings under banking regulations. This decision considers the differences in the intent of the major shareholder credit limit regulations and similar exclusions in the Insurance Business Act.
Currently, many banks operate foreign currency payment accounts with local banks to support domestic companies in overseas payments and transactions. However, banks can only provide credit to major shareholders up to 25% of their equity capital or within the major shareholder's investment ratio. The FSC noted that including deposits in foreign currency payment accounts in credit offerings could pose challenges for some banks in complying with major shareholder credit limits.
The FSC stated, "Through these regulatory improvements, we expect that the management of funds for domestic export and import companies will become smoother, and the efficiency of banks' payment operations will be enhanced."
The internal control evaluations for specialized banks will also be strengthened. Currently included as a sub-item in the management evaluation of risk management, internal controls will be separated into a distinct evaluation category, with the evaluation weight increased from 3.2% to 10%. Previously, in February 2024, the FSC significantly raised the evaluation weight for internal controls in the management evaluation system for general banks from 5.3% to 15%.
Furthermore, the scope of face-to-face operations for internet-only banks will be expanded. While internet banks are generally prohibited from conducting face-to-face sales, they will now be allowed to engage in face-to-face operations when necessary for debtor guidance, consultation, negotiation, and debt restructuring counseling.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.