First meeting held on finance sector reforms

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First meeting held on finance sector reforms

The first meeting between the ruling party’s lawmakers and government officials on reforming the nation’s finance sector took place on Wednesday in response to criticism of the country’s banking system.

Saenuri Party lawmaker Kim Gwang-lim chaired the 22-member task force composed of six ruling party lawmakers, officials and specialists in finance.

“What we discussed today was to set the basic goal: developing a financial institution that people can easily access, understand, feel comfortable with - and which is also reliable,” said Kim. “So far, Korean financial institutions have centered on sales, soundness, collateral, and guarantees, but now, they should consider profitability, future-oriented subjects and business value.”

Supporting and investing in small- and medium-sized enterprises (SME) is necessary for financial institutions, Kim said, as they can earn returns through listing the companies on the stock market.

“Particularly, if a SME with special technology grows, we need to help it get listed on the stock market so that they can pay back loans to banks,” he said. “We also reached consensus over supporting start-ups in some promising industries such as culture, tourism and education through cooperation between technology and finance.”

The task force will take legal steps to propose a bill within November, he said.

The launch of the special team came after Finance Minister Choi Kyung-hwan bluntly criticized the ongoing reforms pushed by the Financial Services Commission (FSC), saying that the follow-up actions from local financial institutions were “far fewer than expected.”

President Park Geun-hye also denounced in her public statement in August the “protectionism” of banks, which demand a guarantee or collateral when issuing loans, particularly to small-sized companies.

Choi reaffirmed his intention to push local banks to extend their opening hours beyond 4 p.m.

At a meeting with officials at the ministry, Choi said, “Although it would not be everything for financial reform, we need to move toward flexible working hours [to] resolve the inconvenience of consumers.”

FSC Chairman Yim Jong-yong also criticized the way Korea’s banks treat smaller companies or start-ups.

At a meeting with heads of start-ups on Tuesday, Yim promised to prevent banks from treating start-ups “as though they were beneath the banks,” doing things like trimming the amount of loans when asked for a cut in the lending rate or adding restrictions when start-ups apply for government subsidies.

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