Business · Companies · 1 hr ago
South Korea weighs easing bank rules for restructured loans
South Korea’s financial regulators are considering a shorter path for restructured loans to be classed as normal.
The proposal would apply when a borrower repays a bank loan after the bank has changed its terms.
Today, borrowers with loans restructured by their own bank generally need to make payments for a year before the loan can be reclassified as normal.
A six-month rule already applies to some household loans restructured through the Credit Counseling and Recovery Service.
Banks set aside more money for loans they see as less likely to be repaid, so a normal classification can sharply reduce required provisions.
Regulators say easing this burden could help banks direct more capital toward financial support for borrowers.
The repayment period is still under review, and regulators have not yet settled whether it will be six months or one year.
South Korea’s financial authorities are considering easing capital rules to reduce banks’ loan-loss provision burden when they restructure borrowers’ debts.
Under the proposal, a restructured loan could be classified as normal after six months of repayments, rather than the current one-year period for banks’ own restructuring.
The authorities are considering extending to banks’ own restructuring a six-month exception that already applies to some household loans under a Credit Counselling and Recovery Service programme.
Lower provisions could free up bank capital for inclusive finance, the stated aim of the review.
The period under consideration remains flexible, between six months and one year.
- Who
- South Korea’s financial authorities are reviewing the rules, following requests from banks.
- What
- They are considering easing capital rules so banks can reclassify some restructured loans after a shorter repayment period and reduce provisions.
- When
- The proposal was reported on November 6, 2026.
- Where
- South Korea.
- Why
- To encourage banks to restructure borrowers’ debts and direct capital freed from lower provisions toward inclusive finance.
This story does not have two clearly opposing sides.
Banks can reclassify a loan they restructured themselves as normal after the borrower has repaid for one year.
Maeil Business reported that financial authorities were reviewing whether to shorten that period to six months.
- Current repayment period
- One year for banks’ own debt restructuring
- Period under review
- Six months to one year
- Existing exception
- Six months for certain household loans restructured through the Credit Counselling and Recovery Service
- Provision rate
- Normal loans: typically 0.5%; loans under watch: typically 10%
- Delinquency threshold
- Three months or more overdue: classified as fixed
1 source
What people are saying
Banks have asked for this, and we are looking into the related details
The purpose is to encourage banks to use the capital capacity freed by setting aside fewer provisions for inclusive finance
The repayment period to be adjusted remains flexible between six months and one year