[DigitalToday reporter Ji-young Lee (이지영)] Financial authorities are seeking measures to tighten regulations on real estate lending by specialised credit finance companies such as card and capital firms. They also plan to require card companies to regularly inspect payment risks at electronic payment gateway (PG) operators. The measures aim to strengthen management of concentration risks in real estate-related credit and risks in online payment intermediary transactions, while easing handling limits for specialised credit firms’ rental business.

The Financial Services Commission said on Thursday it had issued a prior notice of rule changes for a revision to the "Supervisory Regulations on Specialised Credit Finance." It reflected the plan to improve the soundness制度 for real estate project financing (PF) announced in December last year and matters discussed at a meeting with chief executives of specialised credit finance companies in November, among other items.

First, it will newly set sector-by-sector limits on specialised credit firms’ lending to real estate and construction. Current rules limit real estate PF loans, including debt guarantees, to within 30 percent of credit-type assets. No separate sector limits apply to lending to real estate and construction.

Under the revision, lending to the real estate sector and lending to the construction sector must each be managed within 30 percent of credit-type assets. It also includes a restriction that the combined amount of real estate PF loans and real estate and construction lending must not exceed 50 percent of credit-type assets.

It will also strengthen card companies’ responsibility to manage PG operators. Going forward, card companies must assess the risk level of the relevant PG operator each quarter not only when signing or renewing an payment-intermediary contract but also during the period the contract remains in force.

Items subject to inspection include whether the PG operator is registered as an electronic financial business, its financial condition, the status of external management of settlement funds, and any history of financial sanctions or involvement in illegal transactions. Based on the risk assessments and inspection results, card companies must also take necessary steps such as deciding whether to sign or renew contracts, or terminate them early.

Another factor behind the rule overhaul is the growing volume of card payments made through PG operators. The amount spent using credit cards in electronic payment gateway transactions rose from a daily average of 744.5 billion won in 2021 to 968.4 billion won in 2023 and 1.17 trillion won last year.

It will ease handling limits related to specialised credit firms’ rental business. Current rules limit the quarterly average balance of total rental assets to within the average balance of lease assets, and also apply separate limits for individual items.

The FSC plans to broaden the overall rental handling limit to a range based on the combined total of lease assets and instalment finance assets. It will also ensure that the instalment finance assets that can be added do not exceed the size of lease assets. It also decided to abolish the handling limits applied by item.

The FSC, however, decided to maintain a ban on specialised credit firms entering the short-term rental market, where small and mid-sized operators are central. Specialised credit firms plan to pursue expanded credit lines and deferment of principal repayment for small and mid-sized rent-a-car companies. They will also push a plan to link with small and mid-sized rent-a-car companies when short-term rental demand arises, such as for vehicle repair or replacement cars after accidents.

The public comment period for the revision runs until Dec. 2. The FSC plans to complete the supervisory rule revision by the first quarter of 2027 after review by the Regulatory Reform Review Committee and a resolution by the Financial Services Commission.