The repayment deadlines for more than 100 trillion won ($83.4 billion) debts offered to small and mid-sized firms and the self-employed by the South Korean government to help them mitigate the impact of the coronavirus outbreak are nearing, posing a threat to the real economy.
The Financial Services Commission (FSC) said Tuesday that the government offered 56.8 trillion won in debt rollovers and 57.2 trillion won in new loans to SMEs and small merchants from Feb. 7 to June 26 as part of the state’s stimulus measures.
Commercial banks were responsible for 39 trillion won worth rollovers, accounting for 68.7 percent. State lenders including Korea Development Bank (KDB) and Export-Import Bank of Korea (EXIM Bank) provided 17 trillion won worth payment extension and non-banking institutions such as credit card companies and savings bank rolled over 800 billion won debts over the period.
The problem is that the debts extended in support of the authorities begin to mature starting August. The financial institutions rolled over debts maturing within six months for six months to one year since February as part of the government’s relief package aimed at stabilizing public livelihood hit by the virus-driven economic crisis.
According to Maeil Business Newspaper on Tuesday, one of local commercial lenders has 13.78 trillion won worth debts extended to SMEs and self-employed that come due from August to October, up 13.3 percent from 12.16 trillion won of the same period last year.
The FSC said it will decide whether or not to extend the deadlines for repayment by September after reviewing measures to stabilize the real economy and the financial sector at the same time. The FSC vice chairman Sohn Byung-doo said during a meeting held on Tuesday that he will explore solutions with financial companies, and urged banks to bump up their loan loss reserves in preparation for possible lengthening of the virus outbreak.
By Moon Il-ho, Choi Seung-jin, Lee Sae-ha and Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]