(1) Reasons for Proposal

Recently, some specialized credit finance companies suffered from a liquidity crunch due to excessive borrowing. Some point out leverage limits are too lenient. Hence, this Amendment aims to apply the same equity-to-total asset ratio limits to specialized credit finance companies not doing credit card business as those doing credit card business.

(2) Major Provisions

A. Adjust the leverage limits for specialized credit finance companies not doing credit card business as 8 times (Article 7-3 paragraph 1)

Reduce the equity-to-total asset ratio limits for specialized credit finance companies not doing credit card business from 10 times to 8 times, which is the same as those doing credit card business, and adjust the limits to 7 times if at least 30% of net profits in the preceding fiscal year were paid out as dividends.

B. Apply a transitional measure (Addenda Article 2)

The amended provision will be enforced from January 1, 2022. From January 1, 2022 to December 31, 2024, however, a transitional measure will be applied to specialized credit finance companies not doing credit card business under Article 7-3 paragraph 1.