Banks squeezed to lend more


Bankers reacted negatively to the government's move to prod lenders to free up loans to consumers and small companies.

A number of local bankers said the measures are just “pork-barrel policies”* ahead of the general elections due to be held on 15 April, noting it would have an adverse effect on the profitability of banks in the long term.

In particular, the Ministry of Finance and Economy (MOFE) decided to instruct local banks not only to refinance loans to small businesses, but also to expand lending to those suffering from cash flow problems due to the bird flu, heavy snowfall and rising raw materials prices.

“We understand the government has difficulty in dealing with the credit delinquency problem due to the prolonged economic slump, but it is not desirable that the government add pressures on financial firms,” an unnamed Seoul bank vice president said.



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