South Korea’s Financial Services Commission (FSC) published an update from its fifth meeting on the transition to productive finance, announcing measures to improve capital regulations and requirements for banks and insurers to strengthen their capital capacity for lending and investment in productive sectors amid heightened market volatility linked to the Middle East situation. The FSC estimates the capital rule changes will free up productive finance capacity of up to KRW98.7 trillion, comprising KRW74.5 trillion for banks and KRW24.2 trillion for insurers. Banks were urged to shift away from collateral- and guarantee-driven models toward financing for future growth, export-oriented and strategic industries, while insurers were encouraged to use additional capacity to increase investment in long-term national infrastructure and energy transition projects, alongside faster support for microenterprises and small- and medium-sized enterprises facing heightened strain. The update also set out financial-sector relief measures, noting more than KRW53 trillion in assistance programs and reporting that, as of April 7, banks had provided about KRW5.8 trillion in new loans across 17,969 cases and KRW7.2 trillion in maturity extensions and payment deferments across 18,419 cases; insurers and specialized credit finance firms also introduced measures including premium reductions, increased gas-station cashback and installment payment deferments, with the government considering further relief such as lower auto insurance premiums. The FSC and the Financial Supervisory Service (FSS) will monitor whether freed-up capital capacity is being channelled into productive sectors and will continue to identify additional regulatory improvements to support the transition to productive finance.
South Korea Financial Services Commission 2026-04-16
South Korea Financial Services Commission announces bank and insurer capital rule changes to free up KRW98.7 trillion for productive finance
South Korea’s Financial Services Commission, at its fifth meeting on the transition to productive finance, outlined capital rule changes for banks and insurers expected to free up as much as KRW98.7 trillion in lending and investment capacity. Banks are urged to shift from collateral- and guarantee-based models toward financing future growth, export-oriented and strategic industries, while insurers are encouraged to increase investment in long-term infrastructure and energy transition projects and to support smaller firms. The Financial Services Commission and the Financial Supervisory Service will monitor whether the additional capacity is channelled into productive sectors and pursue further regulatory improvements.