Crackdown Is Set On Falsification In Seeking Loans

The financial services community is set to get tough on companies that falsify records to get loans.

The Financial Supervisory Service said Sunday that a system formulated by commercial banks would be instituted later this month that would punish firms that submit falsified documents when applying for loans. Companies found to have misrepresented their accounts will be unable to obtain further loans or extend existing loans, which may be recalled, the agency said.

"These are necessary measures to guarantee transparency and credibility as we switch from security-oriented loans to a credit-based system," an official at the agency said.

The commercial banks will report cases of account manipulation to the National Tax Service or to prosecutors.

Also, according to the plan, companies found to have intentionally misstated information will be penalized with higher interest rates, will be subject to thorough inspections by the banking community, and will have to submit audited financial statements to the main creditor bank for a certain time period.

by Lee Sang-il