Korea’s financial watchdog said Sunday it plans to inspect large local banks and insurers every other year, a change from the current annual checkups, in a bid to ease unintended burdens on financial firms.

Instead, the Financial Supervisory Service is seeking to strengthen the sector-wide monitoring system and focus on issue-based inspections when potential systemic risks crop up.

In the wake of the global financial crisis, the FSS has been conducting inspections of five local banks, including top lender Kookmin Bank, and seven life and non-life insurers every year.

But some watchers raised questions about the effectiveness of one-month-long annual inspections into the country’s large financial institutions as they involved a large number of inspectors and were largely viewed as the watchdog’s taming of financial firms.

“The watchdog is considering pursuing focused inspections,” said a senior official at the FSS. The watchdog is set to unveil detailed plans for improving its inspection practice this month.

As part of such efforts, the FSS is considering conducting year-round monitoring and probing into local bank’s practice of extending mortgage loans. It is also mulling looking into whether local insurance companies comply with consumer protection guidelines. 

(Yonhap News)