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Credit Union Asset Management Firm to Handle Non-Performing Loans
Finance · Major Banks · yonhap_finance · 2026-08-27
South Korea's FSC will allow credit union asset management firms to acquire non-performing loans to improve financial stability and curb illegal debt collection.
What Happened
Regulatory Update: The Financial Services Commission (FSC) has proposed an amendment to the supervision regulations for the lending industry, allowing credit union asset management firms to acquire non-performing loans (NPLs). Previously, this authority was restricted to registered lenders and financial institutions.
Strategic Purpose: The move is designed to support the credit union sector's efforts to manage overdue debt and improve overall financial health. By designating a specialized entity, the FSC aims to streamline the resolution process for distressed assets within the credit union system.
Consumer Protection: A key objective of this policy is to prevent illegal debt collection practices that often occur when loan contracts are sold to unauthorized third parties. Establishing a dedicated, regulated entity ensures that debt management remains within a controlled framework.
Implementation Timeline: The proposed amendment will undergo a public notice period until October 6. It is scheduled to take effect on October 22, coinciding with the enforcement date of the revised Credit Union Act.