Watchdog to allot tech loan quotas to local banks

The financial watchdog is expected to set tech loan quotas for local banks so that they will mandatorily lend to small and mid-sized companies that have high-end technologies but are short of capital to fund their business, financial sources said Monday.

The Financial Services Commission last week announced it will push banks and other financial institutions to increase loans to start-up ventures to help boost the nation’s economy. It said technology credit bureaus will be established to assess each business idea and technologies.

To ease the lending process, the watchdog said it will not punish bank officials for tech loans that turn sour later due to any change in circumstances.

“In order to make the tech loan plan take root in the financial industry, it is necessary to impose quotas on local lenders in the beginning stages,” said an official from the FSC, adding that detailed plans are being mapped out.

The FSC will grant points and incentives to banks that meet the quotas, or give disadvantages to those that are reluctant to extend loans based on technology assessments.

It will also monitor whether banks are participating in the government-led tech loan project, and disclose the results, according to the official.

According to data, bank loans to small and mid-sized companies have been on a steady decline since 2009 when they accounted for 83.1 percent, or 443.5 trillion won ($434.4 billion), of the 533.7 trillion won in total corporate loans. As of June this year, the figure fell to 73.3 percent, or 508.6 trillion won, of 693.7 trillion won. (Yonhap)