The nonperforming loan rate of banks in South Korea fell to a record low in September due to the expanded provision of credit and debt rollovers for small businesses and merchants, the financial watchdog said Tuesday.

The rate of bank loans more than three months overdue in interest or principle payment had stood at 0.51 percent as of end-September, down 0.03 percentage point from three months earlier, according to the Financial Supervisory Service (FSS).

Compared with a year earlier, the rate was down 0.14 percentage point.

The decline stemmed from an overall increase in the aggregate amount of outstanding credit and debt rollovers for small businesses and merchants under the government-led financial support amid the global pandemic, an FSS official explained.

As of end-September, banks' loans overdue had come to 11.9 trillion won ($9.95 billion), down 300 billion won or from three months earlier.

Unpaid corporate loans reached 10.3 trillion won, accounting for 86.2 percent of the total. (Yonhap)