The federation has reviewed the plan as a way to speed up the disposal of nonperforming loans and to provide more systematic support for loss prevention and management improvement. With revisions to the Credit Union Act completed after a National Assembly plenary vote on March 31 and promulgation on April 21, the federation said it will begin related procedures with the goal of starting operations in October this year.
The new credit union asset management company will work alongside KCU NPL Loan, which has handled bad-loan resolution, to help stabilize delinquency rates and strengthen soundness management. Unlike KCU NPL Loan, which has faced limits on NPL purchases due to regulations such as caps on total assets, the new company will be able to buy nonperforming loans more flexibly without requiring additional capital contributions. It may also borrow from the deposit protection fund if needed, which the federation expects will improve the speed and flexibility of funding.
The company will also be able to carry out 12 types of work, including credit checks on debt-related parties and debt collection. The federation said this should allow it to manage the full process more integrally, from purchasing nonperforming loans to recovery, improving efficiency.
Go Yeong-cheol, chairman of the Korea Credit Union Federation, said the company “will provide practical help in managing the soundness of member credit unions by increasing the speed and efficiency of nonperforming-loan resolution.” He added that the federation “will actively support” efforts to ensure the system operates stably in the field.
* This article has been translated by AI.
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