The Financial Services Commission said on the 27th it will issue a notice of regulatory changes to the "Regulations on Supervision of lend businesses, etc." so that the credit union asset management company, whose establishment basis was created by the amendment to the Credit Unions Act, can smoothly conduct the purchase and management of nonperforming loans.
The current "Act on Registration of lend Businesses and Protection of Finance Users" allows the assignment of loan claims only to those stipulated by law, such as lend businesses registered with the Financial Services Commission (FSC) and credit finance institutions, in order to block loan claims under lending contracts from leaking outside the formal system and leading to damages such as illegal collection.
The key of this amendment is to add the credit union asset management company, which is being established under the Credit Unions Act scheduled to take effect in Oct., as an institution eligible to receive assignments of lend claims under the "Regulations on Supervision of lend businesses, etc." Through this, it is expected that a foundation will be laid to swiftly resolve credit unions' nonperforming loans through a dedicated institution.
Under the amended Credit Unions Act, the resolution of nonperforming loans and soundness management at credit unions will be strengthened to a level similar to asset management companies in other mutual finance institutions such as NongHyup and the Korean Federation of Community Credit Cooperatives (KFCC).
The scope of non-business assets that the credit union asset management company can purchase includes assets acquired by cooperatives, the central federation, and the central federation's investee companies due to nonperforming loans; fixed assets that must be disposed of under management and financial improvement measures; and fixed assets that are no longer used for operations due to mergers, business transfers, or contract transfers.