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| ▲ A person walks past ATM machines from South Korea's major banks in Seoul, in this file photo taken Dec. 21, 2025. (Yonhap) |
productive finance-banks
Banks, insurers urged to ramp up role for productive finance amid Middle East crisis
SEOUL, April 16 (Yonhap) -- The country's financial regulator said on Thursday it will move to revamp capital regulations on banks and insurers in order to prod them to play a key role in boosting productive finance amid woes over the fallout from the Middle East crisis.
According to the Financial Services Commission (FSC), banks would have room to provide an additional 74.5 trillion won (US$50.5 billion) in loans and financial support under the proposed overhaul of capital regulations.
Insurers will also be able to additionally provide 24.2 trillion won in financing under the envisioned changes, the regulator said.
The FSC earlier said it will move to change regulations and oversight to help financial institutions play a greater role in productive finance.
Local banks, in particular, have been under fire for their practice of extending loans backed by collateral, which many say has failed to support innovation in the economy.
"We have to spur moves into productive finance so as to nurture strategic industrial sectors," FSC Chairman Lee Eog-weon said during an interagency meeting on productive finance.
Lee also said that financial companies need to serve as a buttress for small merchants and small and mid-sized firms facing troubles caused by the Middle East crisis.
Since the outbreak of the U.S.-Iran conflict in late February, banks have provided some 5.8 trillion won in new financing to the Middle East crisis-hit companies, while extending maturities for 7.2 trillion won worth of loans.
Earlier, major banks said they would provide more than 53 trillion won in new loans for companies affected by the regional conflict, and also extend loan maturities and seek ways to reduce their financial burden.
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