South Korean banks plan to provide financial assistance for contractors of GM Korea Co. that may suffer hardships due to the shutdown of its plant on the west coast, sources said Thursday.

GM Korea Co., the South Korean unit of General Motors Co., closed its factory in Gunsan, 274 km south of Seoul, the same day as part of a restructuring plan aimed at keeping the struggling unit afloat.

According to the sources, Shinhan Bank has decided to roll over their loans that will mature until the end of this year, and to reduce interest rates by a maximum one percentage point.

The lender will also contribute 2 billion won ($1.85 million) to the Incheon Credit Guarantee Foundation to help GM contractors in Incheon, west of Seoul, take out special guaranteed loans to tide over their financial straits.

GM Korea operates a plant in the Bupyeong Ward of Incheon. It operates another factory in Changwon on the south coast.

Woori Bank will allow GM Korea's Gunsan plant and its contractors to extend the terms of their loans that mature until June 11 without repayment.

Woori also plans to extend new secured loans of up to 300 million won to the plant and contractors and to reduce the lending rate by up to 1.3 percentage points.

In addition, other lenders, including KEB Hana Bank and Kookmin Bank, have decided to roll over the maturing loans taken out by GM Korea contractors and suspend their repayment of installment loans for a certain period.

Detroit-based GM announced a restructuring plan for GM Korea in February in a bid to keep the loss-making unit above water. GM Korea logged a cumulative net loss of 3.13 trillion won from

2014-2017 due to a lack of new models and sagging demand.

GM controls a 77 percent stake in GM Korea, with the state-run Korea Development Bank and SAIC Motor Corp. of China holding 17 and 6 percent, respectively.(Yonhap)