The Korea Herald


Central bank's loans to support SMEs near W20 tln

By KH디지털2

Published : May 3, 2016 - 10:38

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Loans extended by Korea's central bank to local lenders to support small and medium-sized firms have climbed to a record high, the central bank said Tuesday.

According to the Bank of Korea (BOK), such loans to local banks came to 19.65 trillion won ($17.27 billion) as of end-April, up 4.9 percent, or 918 billion won, from three months earlier.

Bank of Korea (Yonhap) Bank of Korea (Yonhap)

The April tally marks the highest level since the central bank began compiling such data in 1971.

The increase follows a decision by the BOK's monetary policy board in April 2015 to raise the upper cap on the support loans to 20 trillion won from the previous 15 trillion won.

The loans are extended to local lenders at a low interest rate of less than 1 percent but are earmarked for lending to small and medium-sized enterprises (SMEs).

The monetary policy board has also lowered its lending rate to as low as 0.25 percent on part of the loans in a move to expand liquidity for SMEs and promote their investment.

Korea is currently facing a prolonged slump on two fronts -- exports and local spending -- that are the main engines of growth for Asia's fourth-largest economy but also the source of recent economic woes.

Exports have dropped every single month since the start of last year, while consumption has also remained sluggish.

Earlier on Tuesday, the finance ministry said the country's consumer prices grew 1 percent on-year in March, far short of the 2 percent annual growth target set out by the BOK. (Yonhap)