The South Korea Financial Services Commission published a preliminary notice of amendments to its supervisory regulation on banking business to ease how banks calculate loan-to-deposit ratios, aiming to incentivise additional lending to companies and individual business owners operating outside the Seoul metropolitan area. The proposal reduces the weighting used in the loan-to-deposit ratio calculation by 5 percentage points for eligible non-Seoul loans to companies and individual business owners, to 80 percent and 95 percent respectively, from 85 percent and 100 percent under the current framework. The FSC expects the revised standard to expand banks’ lending capacity for these regional segments by up to KRW21 trillion. The measure forms part of a broader initiative to increase funding flows to regional economies, including raising the share of policy funds supplied to non-Seoul regions from about 40 percent in 2025 to about 45 percent by 2028, increasing annual policy-fund supply by about KRW25 trillion to KRW120 trillion in 2028, and allocating about 40 percent of National Growth Fund investments to areas outside the Seoul metropolitan area. Public comments will be accepted from January 22 to February 11, 2026, after which the rule change will proceed through an approval process ahead of taking effect in the first quarter of 2026.
South Korea Financial Services Commission 2026-01-21
South Korea Financial Services Commission proposes loan-to-deposit ratio rule change to expand non-Seoul lending capacity by up to KRW21 trillion
The South Korea Financial Services Commission proposed amendments to ease loan-to-deposit ratio calculations, reducing the weighting for non-Seoul loans by 5 percentage points to boost regional business lending. This initiative, part of a broader strategy to expand regional funding, could increase lending capacity by up to KRW21 trillion, with public comments open from January 22 to February 11, 2026, before implementation in the first quarter of 2026.