Seoul: South Korea's financial watchdog announced plans to implement a more stringent supervisory framework for banks and other financial institutions, aiming to address the ongoing issue of inappropriate loan extensions. The Financial Supervisory Service (FSS) emphasized its commitment to taking decisive action against organizations lacking robust internal control systems.

According to Yonhap News Agency, the FSS revealed that the Industrial Bank of Korea had issued inappropriate loans amounting to 86.2 billion won (US$58.6 million). This figure significantly surpasses the previously estimated 24 billion won and involves loans extended to former employees of the bank and their family members.

The investigation uncovered instances where officials from the bank received gifts and favors from borrowers in relation to these inappropriate loans. The FSS stated, "(The FSS) will penalize such inappropriate practices and illegal loans in accordance with principles and related rules," and added that more stringent and detailed guidelines will be developed to prevent similar occurrences in the future.

Previously, the FSS had identified that Woori Bank, KB, and NH Nonghyup were involved in extending inappropriate loans totaling a combined 387 billion won.