Korean Asset Management Corporation System For Liquidating NPL Is A Revelation For China

Over the past 30 years the Korean government led a period of economic development, the problems of the deficient economic structure and financial systems, planned credit expansion, strict government control, underdeveloped technology for credit checks, excessive industrial borrowing and fierce competition between financial institutions created a large amount of non performing loans。Banks holding NPL(Non Performing Loans) , restrictions placed on bank's capital management causing a shortage of liquidity, if the scale of nonperforming loans expands and fall into arrears, can lead to insolvency。This will cause a series of banks to become insolvent,can even will result in the collapse of the whole financial system。This issue must be resolved in order to preserve the stability and profitability of the banking systems as well as the country's financial and economic health。The Korean government did not have the basic legal systems or other infrastructure to deal with NPL. In order to quickly and effectively deal with this issue the government created KAMCO(Korea Asset Management Corporation)。KAMCO's first approach was to collect outstanding debt was to use traditional methods to auction off the property of those who have defaulted on loans。This approach was not applicable for all cases so further action was required to collect the remaining NPL。KAMCO created the following laws to further deal with this problem。The Law on the Securitization of Assets, Industry Development Law, Encumbrance Securitization Company Law of the House, CRV(Corporate Restructuring Vehicle)Law, Corporate Restructuring Law, JV-AMC(Joint Venture Asset Management)Company Law。Through these efforts Korea government has achieved same cases of handling NPL。The NPL situation in China is quite similar to the situation in Korea。Korea and China are close neighbors and share many historical and traditional similarities。It is of great significance for China to handle NPL by learning from Korean experience while transplanting western experience,as is helpful for China to overcome the question of"unaccustomed to the climate"。...