The provisioning requirement for non-performing loans at big non-bank lenders in South Korea is being drastically tightened in response to a downturn in the country's real estate market and growing concerns about the banking industry.
Following a meeting with representatives from the five largest non-bank lenders and government departments, the Financial Services Commission (FSC) announced in a statement that it had proposed drastically boosting the necessary provisioning ratio.
Although a decision will be taken later, it added, it offered as an example increasing the ratio of expense that banks must set aside for potential loan loss to 130% of the non-performing loans from the present 100%.
The National Federation of Fisheries Cooperatives, the National Federation of Forestry Cooperatives, the National Credit Union Federation of Korea, and the Korean Federation of Community Credit Cooperatives are the five lenders.