The Financial Commission is strengthening the debt service ratio (DSR) income assessment to prevent high bonuses for executives at major companies like Samsung Electronics and SK Hynix from leading to temporary increases in loan limits. This initiative follows President Lee Jae-myung's directive that "no one should die or be isolated from society due to debt." The commission is also working to institutionalize the regular disposal of long-term delinquent debts within financial companies.
On July 15, the Financial Commission outlined these plans during a presidential report held at the Blue House, marking the first such meeting in seven months since December.
The commission aims to block instances where executives receive substantial bonuses and subsequently increase their mortgage loan limits significantly. This measure is based on the concern that one-time income could inflate borrowing capacity and increase capital inflow into the real estate market.
Currently, if a person's income rises by more than 20% from the previous year due to one-time factors like bonuses, loan limits are calculated based on the average income over the past two years. The Financial Commission is considering extending this assessment period to three years. If this change is implemented, recognized income could decrease, potentially reducing loan limits by tens of millions to hundreds of millions of won for borrowers.
Additionally, the commission plans to tighten capital regulations on mortgage loans for high-value property owners, multiple property owners, and borrowers with excessive loans relative to their income. This is intended to prevent household loans from concentrating in the real estate market and to alleviate the financial burden on financial institutions.
After receiving the report, President Lee emphasized the need for more aggressive management of debt adjustment and delinquent debt disposal systems. He remarked, "In our country, we are strangely harsh on debt forgiveness, which often leads to financial situations that can be fatal for individuals." He added, "If someone becomes a credit delinquent over a few million won, they may struggle to find employment or even open a bank account. Who can endure that?" He noted that financial institutions should anticipate a certain percentage of defaults when issuing loans and reflect that cost in interest rates.
In response, Financial Commission Chairman Lee Ok-keun stated, "We will institutionalize the regular disposal of long-term delinquent debts within the financial system."
The Financial Commission also plans to expand the National Growth Fund from 150 trillion won to 200 trillion won and include new strategic industries such as aerospace in its support targets. The scale of direct equity investments will increase from 3 trillion won to over 5 trillion won annually.
Next year, the commission intends to establish a specialized management company, tentatively named 'Korea Strategic Technology Partners,' to support companies holding core technologies with up to 10 trillion won. To support the establishment of a '5 poles and 3 specialties' system, the annual regional investment scale will increase from 12 trillion won to 16 trillion won, and a separate regional fund of 1 trillion won will be created.
In the capital market sector, the commission aims to implement a 'segment separation system' to distinguish between excellent and general companies by January next year. Starting this month, it will strengthen the delisting criteria for underperforming companies, such as penny stocks, and plans to expand tailored technology special listings in the second half of the year to support innovative companies' entry into the stock market.
* This article has been translated by AI.
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