The Financial Services Commission (FSC) of Korea convened its Liability Review Committee on March 6, 2026, to address obstacles faced by financial institutions participating in the National Growth Fund. The fund is a comprehensive financial support program designed to drive Korea’s future by supporting advanced strategic industries and their ecosystems, including venture innovation and scale-up companies. Over five years, the fund aims to mobilize KRW 150 trillion, split equally between government-guaranteed bonds and private sector capital from banks and pension funds. Recognizing the importance of active financial sector participation, the FSC sought to reduce risk aversion among banks by considering liability exemptions for losses incurred during fund-related activities.
The new policy impacts financial institutions involved in direct and indirect investments, infrastructure financing, and low-interest loans under the National Growth Fund. Except for cases of intentional misconduct or gross negligence, banks and their employees will not face regulatory penalties for losses arising from their investment or lending activities related to the fund. This exemption applies when banks co-invest in projects, participate as limited partners in policy funds, or engage in syndicated loans for advanced industry projects. The aim is to accelerate capital flow into productive sectors and encourage banks to take a more proactive role.
The exemption was formally approved by the Liability Review Committee chaired by Commissioner Kim Beom-gi, following prior government announcements and operational plans for the fund. Key milestones include the December 16, 2025, release of the fund’s operational strategy and the March 6, 2026, committee decision. The exemption is grounded in Article 27-2 of the regulations governing financial institution inspections and sanctions, which allows for liability waivers when policy direction and urgency warrant. The FSC plans further regulatory improvements, such as rationalizing risk-weight rules for fund investments, to sustain private sector engagement.
Frequently asked questions include: What types of financial activities are covered by the exemption? The exemption applies to direct and indirect investments, infrastructure financing, and joint low-interest loans related to the National Growth Fund. Are there any exceptions? Yes, liability is not waived in cases of intentional misconduct or gross negligence. How will this affect banks? The policy is expected to reduce banks’ concerns about unpredictable losses and regulatory sanctions, fostering greater participation in productive finance initiatives.
The Financial Services Commission’s liability exemption is a targeted response to banks’ hesitancy in funding advanced industries due to unpredictable risks. By waiving penalties for losses except in cases of intentional misconduct or gross negligence, the policy encourages greater participation in the National Growth Fund. This is expected to accelerate capital flow into productive sectors and support Korea’s strategic industrial goals. The FSC’s plan for further regulatory improvements demonstrates a commitment to sustaining private sector involvement while maintaining necessary oversight.