The Financial Services Commission moved to actively encourage the lending industry, which holds about 30% of the bonds to be purchased by the New Leap Fund, to join the agreement. It also began strengthening oversight to prevent excessive collections by some non-participating lenders.
On the 19th, the Financial Services Commission held a "meeting to review trends among lenders related to the New Leap Fund," chaired by Financial Consumer Bureau Director Kim Dong-hwan, with related agencies including the Financial Supervisory Service, Korea Asset Management Corporation (KAMCO) and the Korea Lenders Finance Association attending. The New Leap Fund is a program that helps vulnerable borrowers make an economic comeback by adjusting or writing off debts that have been in arrears for seven years or more.
Lenders currently hold about 6.8 trillion won in long-term delinquent bonds of seven years or more and 50 million won or less, of which 4.9 trillion won are bonds targeted for purchase by the New Leap Fund. That accounts for 30% of the total 16.4 trillion won in bonds eligible for purchase.
At the meeting, KAMCO and the Korea Lenders Finance Association agreed to persuade and support the lending industry to actively participate in the New Leap Fund agreement by using incentives such as allowing bank borrowing. If the financial authorities push active persuasion with incentives such as allowing bank borrowing, the number of participating lenders is expected to increase.
The Financial Services Commission plans to strengthen on-site inspections with the Financial Supervisory Service to block excessive collections by some lenders that have not joined the New Leap Fund. Starting in February, the Financial Supervisory Service will focus inspections on collection agencies for purchased bonds to crack down on illegal collections and intimidation-like sales practices, and will impose strict sanctions if violations are found.
An official at the Financial Services Commission said, "While continuing to expand participation in agreements with the lending industry, we will strengthen our cooperation system with related agencies to block debtor harm such as excessive collections in advance."