The Financial Supervisory Service announced on the 25th that it has significantly strengthened the 'credit process' to prevent financial incidents in the banking sector, such as wrongful lending and embezzlement.
As banking sector financial incidents have become larger this year and cases of internal staff leading crimes have occurred, the FSS established a related task force (TF) in September to carry out institutional improvements. The FSS decided to strengthen the verification process for important documents. It has established internal verification procedures, including confirming documents submitted by customers through the issuing organization.
The procedures for evaluating and verifying collateral values will also be improved. Specifically, it will formalize the principle of random selection using an electronic system when requesting an external appraisal. The verification of rental contract authenticity has also been strengthened. Branch managers must collect records of rental payments from borrowers for a certain period after executing a loan to confirm their consistency.
The scope of scrutiny for the misappropriation of funds will also be expanded. The standard for short-term loans excluded from the scrutiny of operating funds will be reduced from the existing 3 months to within 1 month. Employees handling loans who were previously not subject to mandatory leave will be added to the list based on internal audit results and loan handling performance.
An FSS official noted, 'Banks should swiftly improve their internal regulations and develop an electronic system related to self-regulation, and the FSS will closely monitor the compliance status of the banks.'