Finance Minister Choi Kyung-hwan on Thursday criticized the financial sector for its excessive risk-averse culture, saying that such self-protection may be dragging down the overall financial community.

“It is quite worrisome that the whole financial industry is shrinking with signs of money flows being almost clogged,” Choi told financial industry leaders in Seoul.

“The reason for the contraction is that it is focused too much on protecting itself from risks and engaging in passive business tactics,” he said.

The meeting was attended by chiefs of the country’s six major financial associations. President Park Geun-hye also had blasted financial organizations and their leaders for shunning risks, resulting in loans or investments not being made to business projects that are promising but not as safe.

Choi said the financial chiefs should overhaul their current incentive and compensation systems that only encourage less risky collateral-based loans.

“The reality is that making loans based on collateral provides compensation without any disadvantage,” he said. “Under such a system, who would take risks and actively sell their financial products?” (Yonhap)