SEOUL (Reuters) - South Korea’s central bank said on Sunday it would make up to 5 trillion won ($4.12 billion) of extremely cheap funds newly available for local banks that increase lending to smaller firms hit by the economic slowdown.
Banks can use the funds at an interest rate of 0.5% per year, on the basis of their actual amount of lending to smaller companies for purposes ranging from capital investment and additional employment, the Bank of Korea said in a statement.
It is much lower than an actual lending rate of close to 4% that banks actually charge for lending to smaller companies.
The central bank said it was not creating a new lending facility but would make the additional funds available by adjusting ceilings of existing programs.
Reporting by Choonsik Yoo; Editing by Rashmi Aich