Easing bank capital regulations lowers the lending barrier for middle- and low-credit borrowers

The financial authorities have decided to ease banks' capital and provisioning regulations in order to improve loan access for borrowers with insufficient credit and for middle and lowcredit borrowers. Related discussions were held on the 9th at a meeting between the Financial Supervisory Service and risk officers from 11 major banks. The key measure is to apply lower levels of capital and loanloss provisions than the existing assessment model for credit loans approved using an alternative credit evaluation model. The alternative credit evaluation model is a method of additionally determining loan eligibility by reflecting nonfinancial information such as apartment maintenance fee payment history. The authorities are also reviewing regulatory improvements for subordinate mortgage loans on commercial real estate held by small and mediumsized businesses or selfemployed individuals. The intention is to recognize such loans as eligible collateral if certain requirements are met, thereby helping companies raise operating funds. However, residential real estate was excluded from this review.