2026.10.24. The Fair Economy — Real estate-related loans extended by specialized credit finance companies — capital firms and card companies — are set to be tightened. Combined lending for real estate project financing (PF) and loans to the construction and real estate industries will be capped at 50% of credit assets, while loans to each industry individually may not exceed 30%.
The Financial Services Commission (FSC) pre-announced a partial amendment to the 'Specialized Credit Finance Business Supervision Regulation' containing these provisions on Oct. 23. The amendment is set to take effect on April 1, 2027.
Credit card companies' obligations to manage payment gateway (PG) operators will also be strengthened. When signing or renewing contracts with PG operators, card companies must assess their financial status and any history of involvement in illegal transactions, and must conduct quarterly reviews during the contract period.
When calculating the combined 50% cap, if a real estate PF loan also falls under the construction or real estate industry category, it will be classified as a PF loan for the purpose of the calculation. Regulations related to the rental business will also be eased, allowing installment finance assets to be combined with lease assets for calculation purposes.
Specialized credit finance companies that exceed the cap when the amendment takes effect must bring their ratios into compliance within three years. Records of assessment and inspection results must be kept in written or electronic form for five years.
The amendment is a follow-up to the 'Measures to Improve the Soundness of Real Estate Project Financing (PF)' announced in December last year, reflecting discussions at a meeting between the Financial Services Commission chairman and CEOs of specialized credit finance companies in November of the same year.
In addition to the existing rule, which limited real estate PF loans alone to within 30% of credit assets, the FSC has introduced new 30% caps for real estate industry loans and construction industry loans respectively, and has also set a combined cap of 50% for PF loans and real estate/construction industry loans together.
The measure introduces industry-specific lending regulations — already applied to other sectors such as savings banks and mutual finance cooperatives — to specialized credit finance companies as well, in order to reduce the risk of loan defaults stemming from fluctuations in the real estate market.
Capital firms' outstanding real estate PF loan balances fell by 8.8 trillion won (about $6.3 billion), from 27.2 trillion won (about $19.4 billion) at the end of 2022 to 18.4 trillion won (about $13.1 billion) at the end of June this year. Over the same period, the ratio of such loans to equity capital nearly halved, dropping from 95.1% to 47.9%.
However, the quality of the remaining assets has deteriorated: the substandard-or-below loan ratio rose from 5.7% at the end of last year to 7.2% at the end of June this year, and including loans classified as precautionary or below, the figure reaches 13.6% of all PF loans. PF loans maturing within one year amount to 7.6 trillion won (about $5.4 billion), accounting for about 41% of the total, of which 17.8% are classified as precautionary or below.
0 Comments
No comments yet.