Gov"t to Regulate Loans for Companies with High Debts

The government intends to regulate loans for companies with more than a 200% debt to equity ratio.
A source at the Financial Supervisory Commission (FSC) said on November 26, ' The government is making a plan to differentiate the loans provided by banks according to the financial state of companies including their cash flow and debt to equity ratio. If concrete regulations are ready, it will implement the regulations in the year 2000.'
The FSC intends that if banks lend money to companies with more than 200% debt to equity ratio or less cash flow than an industry average, it will force the banks to set aside an additional allowances for the loans.
The FSC explained that if the regulations are implemented exactly, loans for insolvent companies through banks will be all but impossible to receive.