Korea Technology Finance Corporation (KOTEC) and Korea Credit Guarantee Fund (KODIT) were found to have paid more than 4 trillion won last year to repay small and midsize businesses' loans on their behalf.
On the 19th, according to data submitted by Korea Technology Finance Corporation (KOTEC) and Korea Credit Guarantee Fund (KODIT) to the office of Democratic Party of Korea lawmaker Kim Won-i, last year's subrogation payments for KOTEC (direct guarantees) and KODIT (general guarantees) were 1.5677 trillion won and 2.4362 trillion won, respectively.
Subrogation payments are funds KOTEC and KODIT pay in place of small and midsize businesses for which they provided guarantees when the businesses fail to repay loans to financial institutions due to default, closure, rehabilitation, or other reasons. The main funding source for subrogation payments by KOTEC and KODIT is government contributions. As the size of subrogation payments grows, it can negatively affect national finances.
The two institutions' subrogation payments totaled 4.0039 trillion won. It was the highest level in the past 10 years. That was a 49.85% increase from 2016 (2.6719 trillion won). Last year's subrogation rates were 4.76% for KOTEC and 3.9% for KODIT.
The "accident amount" arising from loan guarantees due to arrears or defaults also hit a record high over the past 10 years. Last year's accident amount was tallied at 1.5563 trillion won for KOTEC and 2.2966 trillion won for KODIT.
Last year, the number of accident companies at KOTEC was 4,908, and the number of accident cases at KODIT was 12,921. During the same period, the guarantee accident rates were 5.20% for KOTEC and 3.7% for KODIT.
The two institutions' debt recovery rates were the lowest in the past 10 years. Last year, KOTEC's recovery rate for indemnity claims was found at 4.98%, and for special claims it was found at 0.50%. KODIT's recovery rate stood at 2.7%.