The FSC outlined its financial policy direction for 2017, focused on prompt and thorough response to financial market risks; financial support for stabilization of household livelihoods; and financial reforms and innovation to revitalize the economy.
On the first goal, prompt and thorough response to financial market risks, the FSC says it will closely monitor financial markets to keep risk factors under control through a 24-hour emergency response system.
Measures will be taken to stabilize the corporate bond market to ensure stable conditions for the funding of companies in response to increased volatility in financial markets.
On household debt management, guidelines on stricter screening of loan applications will be expanded to all financial institutions to make sure borrowers take loans that they can afford and repay in installments. The FSC will set out a roadmap in the first quarter of 2017 for improved screening standards of a borrower’s creditworthiness, for example, the gradual introduction of debt service ratio (DSR) as a tighter standard to assess a borrower’s debt repayment ability.
Corporate restructuring will be carried out under consistent principles that emphasize a troubled company’s self-rescue efforts and burden sharing.
A new framework for corporate restructuring (“Pre-packaged Plan”), which combines advantages of creditor-led debt workout and court-led rehabilitation, will be promoted to expedite business normalization of a troubled company.
On sound financial market practices, the FSC will promote more transparency in corporate management and financial transactions by improving the current accounting and audit system, encouraging the introduction of “stewardship code” to a wider range of companies and establish sound financial market practices.
On microfinance support for low-income borrowers, the government will increase its injection of funds into microfinance programs from 5.7 trillion won to 7 trillion won per year. “We will also double provision of mid-rate loans from 1 trillion won to 2 trillion won,” they said.
On support for small-and-medium sized companies, the government says it will provide a total of 128.2 trillion won, which is an increase of 6.8 trillion won from the previous year, to support SMEs.
For mortgage borrowers under temporary financial stress due to joblessness or business shutdown, the FSC says it will come up with plans to defer their repayment of principal and support debt restructuring for overdue loans.
On financial consumer protection, the FSC says it will enact a financial consumer protection law to help financial consumers well informed of financial products and services and better protect them from financial fraud or misconduct.
The government will inject 85 trillion won into new growth engines such as high-tech manufacturing, cultural content or bio and healthcare industries. New and innovative financial services - e.g. internet-only bank and fintech businesses - will create more jobs in the financial sector.
On support for start-ups and tech firms, the government promises to increase loans and investments, while channeling more risk capital into venture companies. The FSC will help SMEs raise funds through crowdfunding, KOSDAQ and KONNEX, it says.
On stronger competitiveness of financial companies, the FSC will push forward financial reforms to promote competition and innovation in the financial sector and continue to communicate with both financial institutions and consumers.
On new and innovative financial services, the FSC will encourage financial institutions and fintech firms to further develop more innovative and convenient financial services for financial consumers.
A “regulatory sandbox” will be launched in the first half of 2017 for fintech firms to test and experiment with their new services and business models free from regulatory burdens.