Bad Debt Held By Banks Falls

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Bad Debt Held By Banks Falls

The total value of bad debts held by Korean banks decreased by 3 trillion won ($2.3 billion) to 27.7 trillion won during the first quarter of 2001, the Financial Supervisory Service said Sunday.

The watchdog agency said that bad debts accounted for 7.6 percent of the banks' total loans at the end of March, down from 8.9 percent at the end of last year. Less loan loss provisions, the rate of loans overdue for three or more months was 4.1 percent of total loans, the agency said, down 0.4 percentage points from the end of last year.

"We plan to encourage banks to restructure to further lower the portion of bad debts to 6 percent by the end of June and then to 3 percent, the standard rate among developed countries, by the end of this year," an FSS official said.

To speed up the clean up of bad loan loads, the government plans to allow loan loss provisions to be booked as losses.

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