Eun Sung-soo Says "Difficult" to Lower Maximum Interest Rate for Private Loans to 10%

At the National Assembly's Political Affairs Committee, Mentioned "Rapid Reduction May Foster Illegal Private Loans"

Financial Services Commission Chairman Eun Sung-soo is attending the full meeting of the Political Affairs Committee held at the National Assembly on the 25th, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Hyo-jin] Eun Sung-soo, Chairman of the Financial Services Commission, expressed a negative stance on the proposal by some to lower the maximum interest rate for loan businesses from the current annual 24% to 10%.

On the 25th, at the National Assembly's Legislation and Judiciary Committee plenary session, when Rep. Yoon Chang-hyun of the United Future Party asked for his opinion on this plan, Chairman Eun said, "The government should make efforts to reduce interest rates, but I think it will be difficult to lower them so drastically."

Gyeonggi Province Governor Lee Jae-myung sent a letter on the 7th to lawmakers of the ruling Democratic Party of Korea, urging that the statutory maximum interest rate for loan businesses be lowered to 10%. Democratic Party lawmakers Moon Jin-seok and Kim Nam-guk have proposed amendments to the Loan Business Act and Interest Limitation Act reflecting this.

The maximum interest rate for loan businesses, which was 66% in 2002, has been repeatedly lowered since then, reaching 24% in 2018. Chairman Eun pointed out, "It was a difficult process even up to this point," adding, "While the intention is to reduce the interest burden, there is a downside in that it could expand illegal private loans."

Yoon Chang-hyun: "Simple logic is dangerous... Local government heads' remarks should be corrected by the minister in charge"

Rep. Yoon said, "The simple logic that lowering interest rates helps the vulnerable is very dangerous," citing analyses from academia and the financial sector that estimate about 650,000 people could be driven into the illegal private loan market if the maximum interest rate drops by 8 percentage points.

Rep. Yoon added, "Local government heads are making such statements, but the minister in charge should accurately point out the issues."

This content was produced with the assistance of AI translation services.