FSS supports Park on public fund for indebted

The financial watchdog said yesterday it will adopt the president-elect’s plans to stem the growth of household debt and gradually wind them down.

“We’re willing to implement the public fund envisioned by President-elect Park Geun-hye as part of measures to facilitate a soft-landing on household debts,” said Gov. Kwon Hyeok-se of the Financial Supervisory Service.

Household debt reached a record 937.5 trillion won ($878 billion) as of the end of September, posing a major drag to the economy that hurts private consumption.

Park pledged during her presidential campaign that she will set up a public fund worth 18 trillion won to help defaulters restructure their debts.

Under the envisioned plan, the fund will be used to reduce as much as 70 percent of debts owed by low-income earners, and also lower interest rates for some selected borrowers.

Kwon said the FSS will also induce financial companies here to ramp up their debt restructuring by allowing borrowers to extend maturities or change debt repayment plans.

“Excessive household debts, problems for the self-employed and the sluggish property market are among the main reasons for the domestic slump,” he said.

Kwon stressed that the FSS will focus on narrowing the discrepancy in the financing capability between large and smaller companies. In Korea, smaller companies are far more disadvantaged in trying to raise capital than their larger rivals.

“We’ll spare no effort to provide the best possible financial assistance for both big and small companies to grow together,” he added.

To guard against any negative impact on the financial market from low-growth and an aging society, it will also shore up its inspection of high-yield investment vehicles and keep tabs on the soundness of financial companies, the FSS said. Yonhap