The financial authorities will regularly publish a "Fact book" that compiles the financial sector's performance in productive finance. The aim is not to stop at simply summing up lending and investment results by financial companies, but to publicly check whether funds actually flowed to advanced industries and regional corporations. The plan for productive finance support over the next five years by private and policy finance institutions has increased to 1,560 trillion won.
On the 15th, according to the Financial Services Commission, Vice Chair Kwon Dae-young of the Financial Services Commission said at the 5th financial industry productive finance council the previous day, "Existing financial sector practices that demand collateral and guarantees and pursue rent(expense) are not easy to change in the short term," and "it should not be productive finance in name only; the financial sector's capabilities must be internalized and systematized."
The Financial Services Commission will publish a Fact book on productive finance progress starting in the fourth quarter of this year. By financial company, a white paper to be released in Dec. will include the definition and goals of productive finance, dedicated organizations, progress in promoting regional finance, and best practices, and an annual report compiling yearly results will be published in May next year. As criticism has continued that the scope and classification standards of productive finance are ambiguous, the financial sector itself will explain the support targets and outcomes.
Productive finance is the government's core financial policy to redirect funds concentrated in real estate and household loans to advanced and innovative corporations, ventures, and regional investment. The Financial Services Commission has been reviewing support plans, organizational restructuring, and performance evaluation systems by financial company through the council launched in Jan.
At the first meeting, it was requested that financial companies establish industry analysis units and hire specialists so they can assess technology and growth potential rather than corporations' collateral and past performance, and also revise KPIs for branches and employees. Since then, the council has discussed execution conditions such as discovering regional corporations, expanding venture capital investment, and granting exemptions for investment losses.
The authorities decided to produce a white paper and an annual report because, as the financial sector's funding supply targets have been rising quickly, a mechanism is needed to verify the substance of "productive finance." In Jan., the five-year support scale was presented as 1,240 trillion won, but with the participation of the Export-Import Bank of Korea, Suhyup Bank, and Samsung Securities and the expansion of existing plans, it increased by 320 trillion won to 1,560 trillion won. Private finance accounts for 628 trillion won, and policy finance for 932 trillion won.
The Financial Services Commission said the financial sector supplied 272.3 trillion won in productive finance through the end of Jul. Woori Financial raised its five-year supply target to 90 trillion won and executed 22.9 trillion won through Jul., surpassing this year's target. Shinhan Financial supplied 4.7 trillion won of this year's 5.9 trillion won increase in corporate loans as productive finance-related loans. Industrial Bank of Korea (IBK) supplied 39.4 trillion won through the end of Jul., achieving 66.9% of its annual target.
The role of policy finance institutions will also expand. As of the end of Aug., the Public Growth Fund approved 17 trillion won out of this year's 30 trillion won support target, of which approvals to support corporations located in the regions amounted to 7.22 trillion won. The Financial Services Commission plans to prepare additional exemption measures applicable across productive finance, in addition to the investment and loan indemnities already applied to financial institutions participating in the Public Growth Fund. The aim is to reduce the burden of potential losses that may occur as financial companies supply funds based on technology and growth potential.