Will the Surge Ease? ... Watching Credit Loan Trends After the Chuseok Holiday

Reference image of bank loan counter (Source=Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] As financial authorities and banks tighten regulations on skyrocketing unsecured loans, attention is focused on whether the upward trend will change after the Chuseok holiday. This is because major commercial banks' loan restriction measures will be implemented around the holiday.

According to the banking sector on the 2nd, Woori Bank will strengthen the preferential interest rate conditions for the 'Woori Main Workplace Employee Loan' starting from the 6th. This includes abolishing the 0.1% preferential interest rate for utility and maintenance fee transactions and stopping the overlapping application of preferential interest rates for credit cards, installment savings products, and Open Banking subscriptions.

For the 'Woori WON Workplace Employee Loan,' the interest rate preferential rates based on salary transfers to Woori Bank accounts and Woori Card payment performance will be reduced by 0.1 percentage points each.

KB Kookmin Bank raised the interest rates on all unsecured loan products by 0.1% to 0.15% points from the 29th of last month by reducing preferential interest rates. Additionally, KB Kookmin Bank will lower the unsecured loan limit for professionals from the current maximum of 400 million KRW to 200 million KRW, and reduce the limit for the 'KB Workplace Employee Reliable Unsecured Loan' from a maximum of 300 million KRW to 200 million KRW.

KakaoBank, an internet-only bank that gained attention for rapidly increasing unsecured loans, also raised the minimum interest rate on workplace employee unsecured loans by 0.15 percentage points from the previous annual 2.01% to 2.16% on the 25th of last month. Other major banks also plan to finalize and implement specific measures such as interest rate hikes and limit reductions soon.

Banks are reported to have submitted plans to the Financial Supervisory Service recently, including these details and how they intend to manage the total volume of unsecured loans until the end of this year. Financial authorities plan to closely monitor loan flows according to banks' self-management plans and consider implementing separate regulations if the rapid increase continues. Strengthening the Debt Service Ratio (DSR) regulation is mentioned as one possible measure.

Yoon Seok-heon, Governor of the Financial Supervisory Service, told reporters on the 24th of last month, "We are taking the management of unsecured loans very seriously," adding, "We are currently taking phased measures with financial companies, and further actions will follow."

Son Byung-doo, Vice Chairman of the Financial Services Commission, said at the Financial Risk Response Team meeting on the 23rd of the same month, "Banks and other financial institutions should make every effort to manage the soundness of household loans themselves," and added, "Financial authorities will also maintain vigilance and closely monitor related trends, and if household loan instability factors persist, necessary management measures will be prepared."

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