Deferral of interest financial authorities vs. commercial banks’brawl’ ahead of the end of March

‘Corona 19 Financial Support’ is at a crossroads. The government and the banking sector are divided over the extension of the principal loans for SMEs and small business owners that expire next March and the delay in repayment of principal and interest.

When the head of the financial authorities indicated the possibility of an extension by mentioning the’soft landing’, banks responsible for half of the financial aid are opposing that extension could be a detonator of a’poor bomb’.

According to the Bank of Korea on the 28th, the proportion of deficit households among the 2437,000 households engaged in self-employment is expected to reach 22.4% in December next year. This outlook is based on the scenario that the loan repayment delay is not extended and the Corona 19 shock continues.

Earlier, in line with the Corona 19 government’s support policy, the financial sector has extended the mid-term and small business owners’ loan principal and interest repayment, which were scheduled until the end of September, until the end of March next year. The amount of maturity extension through policy financial institutions and commercial banks reached 110 trillion won.

The financial authorities are struggling to extend this one more time. This is because the number of confirmed corona19 patients has recorded around 1,000 a day.

Finance Commissioner Eun Seong-soo announced on the 21st at a conference on policy evaluation in response to Corona 19, “We need to prepare a plan for a soft landing in consideration of the payment capacity of individuals and companies.” This means that the loan will not be temporarily withdrawn in early April as scheduled, or all interest deferred on that day will not be paid.

In the banking sector, countermeasures have been taken in response to the spread of Corona 19. We checked the status of financial support and started preparing preparations for a soft landing. At the same time, they are appealing a huge burden for the possibility of’re-extending’. This is because of concerns that it could raise a’bad bomb’ as it could not filter marginal companies that could not even pay interest, let alone the principal.

An official from a commercial bank said, “We need to ensure the soundness of financial companies by selectively proceeding with financial support and by ending the postponement of interest payments.”

Another official also worried, “If a soft landing is carried out in March next year, there is a high possibility that the loan failure will spread to the second financial sector.”