BOK freezes loan cap for small firms at 10 tln won

SEOUL, Sept. 24 (Yonhap) -- South Korea's central bank froze Thursday the cap on
low-rate loans it offers to small firms through local banks for the fourth
quarter, hoping to give them easier access to funding.

The Bank of Korea (BOK) has raised the limit by a combined 3.5 trillion won
(US$2.9 billion) to 10 trillion won since October 2008, as the downfall of U.S.
investment giant Lehman Brothers sparked the global financial meltdown.
The loans, which commercial banks re-lend solely to small and medium enterprises,
carry an annual interest of 1.25 percent.
The decision to keep the cap unchanged for the October-December period came after
BOK policymakers held a regular meeting earlier in the day. The loan cap is
determined on a quarterly basis.
Smaller companies in South Korea suffered a cash shortage following Lehman's
collapse as banks became wary of extending loans.
The BOK cut its key interest rate by a total of 3.25 percentage points to a
record low of 2 percent between October and February in an attempt to put the
brakes on a sharp economic free-fall.
sooyeon@yna.co.kr
(END)