Seoul: The chief of the country's financial regulator has once again emphasized the need for banks to play a more significant role in the realm of productive finance. During a ceremony dedicated to the establishment of a preparatory body for a large-scale public-private fund aimed at investing in high-tech sectors, Lee Eog-weon, chairman of the Financial Services Commission (FSC), urged banks to revamp their lending practices and allocate more funds toward innovative and productive sectors.

According to Yonhap News Agency, Lee Eog-weon highlighted the need for banks to undergo a dramatic shift in their longstanding business approaches and mindsets. Despite banks generating substantial interest income, their contribution to financing high-risk sectors remains limited, Lee noted.

In a significant move last September, President Lee Jae Myung revealed plans to establish a 150 trillion-won (approximately US$120 billion) public-private fund. This initiative, scheduled for launch early next month, is designed to bolster investment in artificial intelligence (AI) and other advanced industries.

Dubbed the "Public Growth Fund," this fund represents one of the President's key economic commitments, aiming to expedite AI adoption across various sectors and funnel resources into critical industries such as semiconductors, secondary batteries, biotechnology, energy, hydrogen, defense, vaccines, and robotics over the next five years.

The fund will be composed of a 75 trillion-won government-guaranteed segment for strategic industries, set to debut in December, and an equivalent amount in private-sector investment. This investment will include a mix of direct and indirect financing, government-backed bonds, and low-interest loan programs.