FSC Korea Announces Fintech Updates and COVID-19 Measures
FSC Korea introduced a new tech financing guideline, which outlines details about the specific target business sectors and relevant procedures of tech financing. The guideline specifies tech financing procedures for small and medium enterprises, banks, technical credit bureaus, and Korea Credit Information Services. The guideline aims to promote independence of tech credit evaluation by prohibiting inappropriate activities by banks and technical credit bureaus while suggesting fair professional standards. The guideline became applicable from January 2021. However, the standardized tech credit evaluation model will be made available in the second half of 2021 after the completion of system development. Until now, five tech credit bureaus and ten banks have provided tech credit evaluation service using their own evaluation models.
In addition, Doh Kyu-sang, the Vice Chairman of FSC Korea, held the financial risk assessment meeting in January to review the progress of the COVID-19 financial support programs for small merchants and small and medium- size enterprises (SMEs). FSC Korea announced the availability of additional lending support for small merchants, including lower interest rates and guarantee fees for the second phase COVID-19 financial support program and the newly launched lending support of up to KRW 10 million for those hit by social gathering restrictions. From January 18, 2021, the second phase COVID-19 lending program for small merchants will be offered at an interest rate of maximum two percentage points lower than the previously offered levels. The banking sector agreed to lower interest rates for small merchant loans by one percentage point on December 29, 2020. In addition, KB Kookmin bank, Woori Bank, KEB Hana Bank, NH Bank, and Industrial Bank of Korea will offer an extra percentage point reduction in interest rates.
In yet another development, in December 2020, FSC Korea decided to grant preliminary MyData business licenses to twenty-one financial institutions, fintech firms, and electronic financial businesses, out of a total of thirty-five applicants. In January 2021, FSC Korea decided to grant preliminary MyData business licenses to seven more business entities: Viva Republica, Minwise Co, Coocon, Fintech Inc., Habit Factory, Standard Chartered Korea, and SK Planet. For Kakao Pay, the application review is still ongoing. FSC Korea plans to announce the final license approval results in late January. Aside from the approval process, the authorities are working on measures to strengthen consumer protection in MyData sector. The authorities plan to come up with a specific guideline in this regard in February 2021.
Related Links
- Tech Financing Guideline
- COVID-19 Financial Response Plan
- COVID-19 Lending Program
- MyData Business Licenses, January 2021
- MyData Business Licenses, December 2020
Keywords: Asia Pacific, Korea, Banking, COVID-19, Fintech, Credit Evaluation, SME, MyData, Credit Risk, FSC
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