South Korea central bank frees more cheap funds for smaller firms

By  Trend

South Korea’s central bank said on Sunday it would make up to 5 trillion won ($4.12 billion) of extremely cheap funds newly available for local banks that increase lending to smaller firms hit by the economic slowdown, Trend reports citing Reuters.

Banks can use the funds at an interest rate of 0.5% per year, on the basis of their actual amount of lending to smaller companies for purposes ranging from capital investment and additional employment, the Bank of Korea said in a statement.

It is much lower than an actual lending rate of close to 4% that banks actually charge for lending to smaller companies.

The central bank said it was not creating a new lending facility but would make the additional funds available by adjusting ceilings of existing programs.