Koh Seung-beom, chairman of the Financial Services Commission, announced on the 19th that, in principle, the loan maturity extensions and repayment deferrals of self-employed people will end as scheduled at the end of March, but the final decision will be made in consideration of the COVID-19 situation. Opinions of experts in various fields were divided on this.
Chairman Koh said at the ‘Small Business Debt Risk Inspection Meeting’ held at the Federation of Banks in Myeong-dong, Seoul on the same day, “In principle, the maturity extension and repayment deferral measures should end at the end of March. We will make a decision based on comprehensive consideration,” he said.
In the meantime, Chairman Koh said, “We will prepare safeguards so that the self-employed do not experience a sudden burden of repayment or difficulties in using finance in the process of normalizing (loan). will be reviewed,” he said.
As for financial institutions, he re-emphasized that they should sufficiently expand their capacity to absorb losses, such as provision for bad debts, in preparation for an increase in bad loans.
Experts who attended the meeting were divided between the opinion that it is appropriate to ‘extend the extension’ and the opinion that it is appropriate to ‘end’ it as scheduled. Nam Chang-woo, vice president of the Korea Development Institute (KDI), said, “The recovery of sales for small businesses is being delayed due to the strengthening of social distancing due to the re-spread of COVID-19.
Hong Un-sun, vice president of the Small and Medium Venture Business Research Institute, also said, “Small businesses are burdened with financial costs due to reduced sales and increased base interest rates, so we hope to extend the maturity extension and repayment deferral measures until the COVID-19 situation subsides.” Customized support measures should come first in line with the economy of small businesses, which have different recovery rates by industry,” he said.
On the other hand, Seo Jeong-ho, vice president of the Korea Institute of Finance, said, “The financial support measures cannot be continued forever, and we need to seriously consider the side effects of prolonged periods. do,” he said.
Kim Young-il, head of the Nice Rating Information Research Center, also said, “The maturity extension and repayment deferral measures have already been extended three times, but if the extension is continued, there is a possibility that the risk of insolvency may be excessively accumulated. It is necessary to provide customized support measures such as liquidity support for small business owners,” he said.
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