Cabinet approves temporary hike in banks’ contribution to policy financing

The Cabinet on Tuesday approved a government-proposed increase in contributions by local financial firms to policy financing. The move comes amid sharp increases in household loans, which jumped at the fastest clip in over three years in August. Under the temporary scheme, local banks will be required to provide 0.035 percent of their overall household loans to support policy financing until the end of the year, up from the current 0.03 percent, according to the Financial Services Commission. The contribution rate for other financial institutions, including savings banks, insurance firms and mutual trust funds, will be temporarily raised to 0.045 percent from the current 0.03 percent. "The revision is expected to help ensure means to secure a stable and continuous source of funding for policy financing," the financial regulator said in a press release, adding the funding will amount to 103.9 billion won (US$77.9 million). Source: Yonhap News Agency