BOK mulls more loans for smaller firms

SEOUL, Oct. 22 (Yonhap) -- South Korea's central bank said Wednesday it will
consider providing commercial lenders with more low-rate loans reserved for
smaller companies in a bid to help them weather the current cash crunch.
The Bank of Korea (BOK) currently maintains a cap of 6.5 trillion won (US$4.74
billion) on such loans carrying an annual interest of 3.25 percent. BOK Gov. Lee
Seong-tae and his six fellow policymakers are slated to discuss the issue on
Thursday.
If the BOK policymakers decide to raise the upper limit, it would be the first
cap increase since Oct. 2001.
The move comes after Gov. Lee told a parliamentary audit that the central bank
will consider increasing the amount of its loans to commercial lenders in a move
to help inject liquidity into smaller companies.
South Korea's smaller companies are suffering from a cash shortage as banks have
become increasingly reluctant to extend loans amid the global financial turmoil.
The government unveiled on Sunday sweeping measures aimed at providing three-year
state guarantees for banks' foreign debts worth up to US$100 billion and
injecting $30 billion into dollar-starved banks and companies. On Oct. 1, the
financial watchdog said it will extend liquidity of about 4.3 trillion won to
smaller firms.