The South Korea Financial Services Commission held an inaugural meeting on transforming the financial industry toward “productive finance” and outlined a package spanning policy finance, supervision of financial business, and capital markets, alongside plans to launch a KRW150 trillion-plus National Growth Fund over five years and recalibrate capital regulation for banks and insurers. Policy financial institutions are expected to channel more capital to high-tech, venture businesses and local economies, including by scaling back guarantees for real estate financing while expanding technology financing and developing region-specific financing models. The National Growth Fund is set at KRW150 trillion, combining a KRW75 trillion high-tech strategic industry fund and another KRW75 trillion from the private sector, individuals, and financial companies, with investment tools including equity, low-interest lending support and infrastructure investment, focusing on sectors such as artificial intelligence, semiconductors, biotech, vaccines, robotics, hydrogen, secondary batteries, display panels, future cars and defense, as well as game and content and patient-capital needs for startups. Capital market measures include introducing business development companies and security token offerings, requiring large securities businesses to supply venture capital, and pursuing steps to strengthen stock market investor confidence. For banks, the minimum risk weight on domestic home mortgage loans will rise from 15 percent to 20 percent, the risk weight for securities holdings will be lowered to 250 percent in principle while remaining 400 percent for short-term holdings of less than three years and for venture capital investment, and criteria will be introduced for bank investments in policy-sponsored funds that qualify for a 100 percent risk weight. For insurers, the FSC flagged potential changes to how market risk values are reflected in the Korea Insurance Capital Standard ratio for certain fund investments and policy-supported unlisted securities, and it will consider introducing a matching adjustment to support asset-liability cash flow alignment. The bank risk-weight rule changes are scheduled for the first quarter of 2026, alongside the establishment of a taskforce to identify further banking-sector reforms. Measures to improve capital regulation in the insurance sector are due in October, and the FSC and the Korea Development Bank plan further meetings with financial companies, industry representatives and ministries to promote the National Growth Fund and related support programmes.

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