The Financial Services Commission announced on Tuesday that it will ease regulations on credit lending limits for overseas subsidiaries of financial holding companies starting from Jan. 1, 2024.

The regulation revision comes after the FSC pledged in July to help local financial companies beef up their presence in overseas markets.

Under the current regulation, the credit lending limit for each subsidiary must not exceed 10 percent of the parent company's equity, and the total credit lending limit for subsidiaries as a whole must be maintained within 20 percent of the parent company's equity.

This is to maintain the soundness of the financial holding company and prevent the spread of risks to subsidiaries in the event of a crisis.

However, financial firms have been complaining about this regulation as it is difficult to raise funds locally in the early stages of overseas expansion due to local subsidiaries' insufficient credit and lack of collateral.

The revision grants financial holding companies an additional credit lending limit of up to 10 percentage points for their overseas subsidiaries. However, the additional credit lending limit will be granted for only three years following the establishment of overseas subsidiaries.

"Considering industry input, we determined that a three-year period is deemed appropriate, as going beyond this timeframe can introduce risks and dilute the regulatory intent,” an FSC official said.

The FSC expects that the revision will help to alleviate funding difficulties for overseas subsidiaries of financial holding companies and promote the acquisition and establishment of overseas subsidiaries, the official added.

The FSC also announced on Tuesday that it is inviting the public to provide feedback on this proposed regulation revision. This period for public comments will be open until Nov. 10.

Meanwhile, Korean authorities have also been making efforts to attract more foreign investment and improve the environment for foreign financial firms to do business in Korea.

In July, Financial Supervisory Service Governor Lee Bok-hyun held a meeting with heads of foreign financial companies doing business in Korea and provided an update on the actions being taken to address the issue of registration delays for foreign funds.

"We have formed a specialized team solely responsible for the screening process. Moreover, we have appointed four additional personnel who exclusively focus on screening foreign funds," he said at the time.

In July, the financial authority also announced the relaxation of the regulation on the Korean won's lending-to-deposit ratio.

Previously, banks with loans exceeding 2 trillion won ($1.6 trillion) were required to lower their Korean won lending-to-deposit ratio to below 100%. However, this regulation is now only being applied to foreign banks with loans exceeding 4 trillion won.

Moreover, the head of the FSS pledged to cut red tape for foreign financial firms that are trying to enter the Korean market by reducing and simplifying the process to establish a branch in Korea.