According to the Kyunghyang Shinmun and other outlets, the Saedoyak Fund, a bad bank for long-overdue debt, has bought roughly 11.7 trillion won of claims in its first year and halted collection. Reviews of ordinary debtors, actual write-offs and lenders that have not joined remain open tasks.
The Saedoyak Fund is a bad bank for long-overdue claims launched on October 1 last year by the Financial Services Commission and the Korea Asset Management Corporation (KAMCO). It covers unsecured claims of individuals and sole proprietors that are overdue by seven years or more with principal of 50 million won or less, and it buys them in bulk from participating lenders without any application from the debtor, halting collection. At launch the government expected purchases of 16.4 trillion won and 1.134 million beneficiaries.
광고 문의 · 300×250According to EBN, citing Financial Services Commission audit materials, purchases stood at 11.7 trillion won as of the end of August, covering about 960,000 people. For debtors, the end of collection alone is a relief, but actual debt reduction follows a repayment-capacity review. The Kukmin Ilbo stressed that buying claims and actually forgiving debt are separate things.
Structure and first-year results
The fund is reported to be financed with 840 billion won, made up of 400 billion won from the government budget and 440 billion won contributed by the financial sector. According to the Kukmin Ilbo, six rounds of purchases through the end of July bought 11.7378 trillion won of claims. The figure of 957,000 people double-counts those who owe money to several institutions.
Write-offs reached a cumulative 2.2583 trillion won by the end of June, covering about 237,000 people once duplicates are removed. They have been concentrated in claims where review is skipped, such as those of basic livelihood recipients, disability pension recipients and veterans. The stage in which ordinary debtors’ income and assets are checked, claims are extinguished for those unable to pay and restructured for others, with 30 to 80 percent principal reduction, full interest waivers and installments of up to ten years, is only now getting under way.
The work that remains
The first issue is speed. The Financial Services Commission said it began reviews using financial-asset data in August and plans additional write-offs in the fourth quarter. As the pool of restructuring candidates grows, the key is to prevent processing delays from prolonging debtors’ anxiety.
The second is the blind spot in purchases. Only 15 of the top 30 money lenders by holdings of long-overdue claims have joined the agreement, so how to handle claims held by non-participants is unresolved. EBN also reported that a plan to strengthen management of overdue debts held by public institutions is due by December.
The third is fairness and high interest. Critics note that people who stayed delinquent longest may be written off while those who restructured and are repaying faithfully find it hard to get fund support. The government separately introduced the Saedoyak Loan, a 550 billion won low-interest program at 3 to 4 percent with up to 15 million won per person, but the Kukmin Ilbo analysis did not treat a structural response to overdue interest inflated by high rates as a distinct issue. If other debts remain after write-off, recovery is hard, so whether access to financial services is actually restored bears watching.
