[2020 National Audit] Loan Amount Exceeding Legal Maximum Interest Rate 830 Billion Won

Two Years Since Legal Maximum Interest Rate Cut
Loans Exceeding 24% Annual Interest Still at 830 Billion Won
Jeon Jae-su "Doubtful if Monitoring Is Proper... Comprehensive Investigation Needed"

Jeon Jae-su, Member of the Democratic Party of Korea./Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Min-young] More than two years have passed since the statutory maximum interest rate was capped at 24% per annum in February 2018, but it has been revealed that loans exceeding the maximum interest rate in the secondary financial sector amount to approximately 830 billion KRW.

According to data submitted by the Financial Supervisory Service to Jeon Jae-soo, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, as of the first half of this year, loans exceeding the maximum interest rate reached 827 billion KRW.

All of these loans were issued by the secondary financial sector. Of these, 93.15%, or 770.4 billion KRW, were loans from savings banks. Capital companies, which are specialized credit finance companies, accounted for 56.6 billion KRW.

Looking at the amount of loans exceeding the interest rate by capital company, BNK Capital had the highest amount at 14 billion KRW, followed by OK Capital (12.9 billion KRW), Hyundai Capital (10 billion KRW), KB Capital (6.9 billion KRW), and Aju Capital (6.3 billion KRW).

Banks, mutual finance institutions (such as credit unions, Nonghyup, Suhyup, and forestry cooperatives), and insurance companies had no loans exceeding the statutory interest rate.

Assemblyman Jeon Jae-soo pointed out, "Although more than two years have passed since the statutory maximum interest rate was lowered to reduce the burden of high-interest loans on low-credit vulnerable groups, excess loan amounts remain in the secondary financial sector, which is widely used by ordinary citizens," adding, "It will take a long time for ordinary citizens to actually feel the effects on the ground."

Assemblyman Jeon added, "I question whether the financial authorities have properly monitored the situation so far," and emphasized, "A comprehensive investigation is needed on the current status and effectiveness of the maximum interest rate system."

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