S.Korea to overhaul old-fashioned financial regulations for new growth engine

South Korea's financial regulator said Thursday that it will overhaul the country's old-fashioned financial regulations as part of the efforts to foster the financial industry as a new growth engine and help strengthen the role of the industry as a supporter for real economy.

The Financial Services Commission (FSC) said that it will introduce the principle-based regulation in entry barrier and business activity, while keeping and strengthening the rule-based regulation in financial soundness, consumer protection and individual information protection.

The principle-based regulation refers to offering more autonomy by presenting the basic principle and direction of regulations. The rule-based regulation supervises economic players with detailed and concrete rules.

Since President Park Geun-hye offered regulatory reform as a main goal of state affairs in February, the regulator had tried to find "hidden" and unnecessary regulations, resulting in the elimination or adjustment of some 700 rules among a total of some 5,000.

The FSC said better regulation will reduce regulatory costs for financial companies, noting a desirable regulatory reform could mean enforce better regulations, not eliminating all rules.

The regulator planned to lower the barrier to entering the existing financial businesses as part of efforts to boost competition and enhance efficiency in the financial industry.

It will shorten the period necessary to approve a new player's entry to the industry from the current six months to three months, while allowing newcomers to launch asset management with smaller capital.

The threshold on credit line for financial companies will be raised from the current 60 percent of equity capital to 100 percent, while they will be allowed to do the universal banking that has been banned at home.

With the eased regulations, the FSC will encourage financial companies to support the real economy by offering incentives to those who help small growth companies with creative technology raise funds in the stock and bond markets.