South Korea's financial authorities will raise investment limits and expand linked investment by financial companies to increase lending to mid-to-low credit borrowers through online investment-linked finance.

The Financial Services Commission on Monday held a meeting with the online investment-linked finance industry on boosting funding for mid-to-low credit borrowers and announced measures to invigorate the sector.

The FSC will raise the proprietary-fund investment limit for online investment-linked finance operators with strong records in mid-to-low credit lending and credit assessment capabilities to 40 percent from 20 percent. It will also increase the limit for linked investment by financial companies to 50 percent from 40 percent.

The investment cap for retail investors will also be raised to 50 million won from 40 million won.

It will also expand participation in linked investment by mutual financial institutions and widen eligible investments to include credit loans to sole proprietors. It will push improvements to loan maturity extension systems and promote linkage with credit evaluation models tailored to small business owners.

To protect investors, it will strengthen disclosure of loss rates and external verification of management information. It will also improve procedures for the closure and restructuring of insolvent online investment-linked finance operators.

The FSC plans to accept applications for innovative financial services, review them and prepare a bill to amend the law, targeting the first quarter of next year.