Financial regulator vows support for financially needy

South Korea's top financial regulator vowed Monday to focus more on supporting the financially needy by strengthening local microfinancing services as it kicked off a second round of the state-led debt relief program for mortgage borrowers.

The pledge came one day after the Financial Services Commission (FSC) announced a plan to provide an additional 20 trillion won ($18 billion) to help borrowers convert their short-term floating-rate loans into long-term, fixed-rate ones. The first batch of funds for the program ran out in just five days.

"I will concentrate all our attention on microfinance policies after the fixed-rate conversion loans settle," FSC Chairman Yim Jong-yong was quoted as saying by a spokesman after a meeting with his officials. "I will look closely into the entire system first."

He said he will improve the network among state-run microfinancing and debt relief funds, including the National Happiness Fund and the Credit Counseling & Recovering Service, in order to provide custom-tailored services to those in lower-income brackets.

"The microfinancing services not only belong to the financial sector, but also are related to education, counseling and rehabilitation," said Yim.

The new mortgage refinancing program is designed to lower debtors' debt-servicing burden and allow them to steadily repay the loans over a long term as part of Seoul's efforts to tackle mounting household debt.

Household debt has been a pain in the neck for local policymakers as it stunts consumer spending and weighs on the national economy that has been slowing in recent years.

According to central bank data, South Korea's household loans totaled 1,089 trillion won as of end-December, with mortgage loans reaching 460.6 trillion won, 42 percent of the total. (Yonhap)