South Korea with a population of over 4.8 crore is hailed as a miracle of Asia in view of its excellent economic growth during seventies and eighties. It, however, faced its worst banking and economic crisis during 1997 due to many adverse factors like excessive credit supply to Chaebols, government interference in bank managements, poor regulatory oversight, weak financial structures etc. South Korean won has been massively depreciated in the wake of financial crisis following massive outflow of foreign currency funds. There was substantial depletion of foreign currency assets as well.

International Monetary Fund has implemented a rescue package and certain banking and economic reforms have then been implemented to minimize governmental control, strengthen supervisory oversights of banks and enhance transparency and governance practices. South Korean banks have implemented BIS regulations regarding CAR, asset classification and provisioning. Weak banks have either been closed or merged with stronger banks. There was massive recapitalization of banks besides purchase of problem loans by asset management companies. Major banks have been nationalized but once the crisis is over, the privatization process has been put in place. Banks have now become more stronger and healthier with good profitability and sound capital bases. There are still challenges in the form of excessive pile up of retail credit and higher default rate in credit card business besides huge government expenditure.

South Korean Banks, bank, loan assets, government bank, disinvestment, financial ratios, CAR, NPL ratios, Internet banking, cross-selling opportunities, financial holding, bank managements, financial structures, good profitability and sound capital bases, BIS regulations, asset classification and provisioning, governmental control, International Monetary Fund.