BOK freezes loan cap for small firms

SEOUL, Dec. 24 (Yonhap) -- South Korea's central bank on Thursday froze the cap
on low-rate loans it offers to small businesses for the first quarter of next
year, hoping to help them secure more funding.
The Bank of Korea (BOK) raised the limit by a combined 3.5 trillion won (US$2.98
billion) to 10 trillion won between October 2008 and March amid the global
financial meltdown, sparked by the collapse of Lehman Brothers.
The loans, which the BOK extends through commercial banks to small and medium
enterprises, carry an annual interest of 1.25 percent.
The decision to keep the cap unchanged for the January-March period came during a
regular BOK meeting earlier in the day. The loan cap is determined on a quarterly
basis.
The move comes amid growing debate over when and how the government and the BOK
should begin to roll back emergency measures taken to bolster the slumping
economy.
The BOK cut its key interest rate by a total of 3.25 percentage points to a
record low of 2 percent between October 2008 and February in an attempt to put
the brakes on a sharp economic free-fall.
sooyeon@yna.co.kr
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