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Help for 810,000 Credit Delinquents with Small Outstanding Debts

Help for 810,000 Credit Delinquents with Small Outstanding Debts

Posted August. 25, 2003 21:36,   


The government decided to help 810,000 credit delinquents with small amount of debt of less than 11 million won recover their credit rating through measures such as delaying their repayment date and debt reduction of a portion of their past due payment, etc.

The existing registration and management system, subjecting people who failed to repay outstanding debt of over 300,000 won for over 3 months, will be replaced by a comprehensive credit information management system nest year.

The measure was announced today after an economic policy coordination meeting at the Government Complex in Gwachon, chaired by Vice Prime Minister and Minister of Economy and Finance Kim Jin-pyo.

As a first step, the government plans to make financial institutions assist 810,000 credit delinquents, who have delayed payment of less than 10 million won and show a willingness to repay the debt, to recover their credibility and reflect the results in the Financial Supervisory Committee`s bank management performance evaluation.

The Korea Federation of Banks will decide to reveal the statistics on credit delinquents listed by banks and credit card companies. The Credit Recovery Assistance Committee, an autonomous coordination organization among financial institutions, plans to encourage agriculture and fishery co-ops, community banks and trust co-ops to become its members while enhancing the effectiveness of the efforts to help credit delinquents by establishing local branches in Busan, Daegu, Kwangju and Daejon.

Financial institutions also decided to transform the Credit Recovery Assistance Committee into a non-profit organization, a portion of whose budget is shouldered by the government. The Financial Supervisory Commission and the Bank of Korea will pay 50% of its budget in 2004, 30% in 2005 and 20% in 2006.

When the Joint-Debt Collection System, which is scheduled to start its operation from next year, collects information on people indebted to more than 2 financial institutions, the committee will precede with debt adjustment for them by taking measures such as debt reduction.

But, to prevent moral hazard, the government will strictly manage debtors, who might take advantage of the new system in order to evade debt repayment, and create an environment under which people have to repay their debts even it takes much time.