SEOUL, April 13 (Reuters) – The delinquency ratio for loans extended by South Korean banks turned lower in March from the previous month but remained higher year-on-year due mainly to soured loans to small companies, a regulator said on Monday.

The ratio came to 1.46 percent at the end of March, against 1.67 percent in February and 1.50 percent in January, according to the Financial Supervisory Service’s policy report to parliament.

The delinquency ratio for lending to small and medium-sized enterprises (SME) also dropped to 2.32 percent at the end of last month, from 2.67 percent a month before.

Domestic banks increased lending to SMEs by 30 percent to 3.9 trillion won in March from February.

The South Korean government and central bank have been pumping fresh liquidity to the banking sector to allow banks to keep lending to cash-strapped companies, while setting up a 20-trillion-won ($15 billion) fund to recapitalise domestic lenders.

A combined 4 trillion won from the bank recapitalisation fund had been injected into eight financial institutions as of end-March, including Kookmin Bank, Woori Bank and Hana Bank, the Financial Services Commission, a financial watchdog, said in a separate statement.

Kookmin, Woori and Hana are units of KB Financial Group (105560.KS), Woori Finance Holdings (053000.KS) and Hana Financial Group (086790.KS), respectively.

Separately, South Korean banks will assess the accounts of 45 large business groups from this month with an eye to restructuring their weaker units.

($1=1337.5 Won)

(Reporting by Kim Yeon-hee; Editing by Jonathan Hopfner)