Banks Tighten Loans Again and Again Under Pressure from Authorities

Cases of Complete Suspension of Handling

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

[Asia Economy Reporter Kim Hyo-jin] The tightening of loans in the banking sector is becoming increasingly severe. This is interpreted as a result of financial authorities intensifying pressure following the recent surge in household loans, including unsecured loans, despite continuous management orders.

According to the banking sector on the 9th, KB Kookmin Bank decided to completely suspend the recruitment of mortgage and jeonse loans through loan consultants from today until the end of the year. Loan consultants act as loan consultation windows outside the bank, similar to card solicitors, connecting the bank and borrowers, and this means that loan applications through them will not be accepted for the time being.

Woori Bank will stop selling its main non-face-to-face unsecured loan product, 'Woori WON Workplace Loan,' starting from the 11th. This has attracted attention as it goes beyond raising the loan threshold through interest rate adjustments to completely stopping and blocking the handling of the product.

There is also a strengthening movement to tighten loan requirements in the existing manner. Hana Bank is currently considering lowering loan limits for professionals such as doctors and lawyers.

With the spread of non-face-to-face transaction culture, internet-only bank KakaoBank, which has gained attention due to a surge in total loans this year, raised the loan interest rates for high-credit borrowers on workplace unsecured loans and overdraft loans by 0.10 percentage points and 0.25 percentage points respectively at the end of last month, in line with the strengthened regulations on high-income borrower unsecured loans.

KakaoBank also raised the minimum interest rate on workplace unsecured loans by 0.15 percentage points from 2.01% per annum to 2.16% per annum in September.

The Financial Supervisory Service (FSS) reportedly ordered banks to manage loans more thoroughly during a loan management and trend inspection meeting with household loan managers from commercial banks on the 4th.

The FSS pointed out the sharp reversal to a surge in household loan trends last month and urged banks to strictly comply with the total loan management targets submitted since September.

An executive vice president of a commercial bank said, "We are taking this as a very strong warning."

The household loan balance of the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?rose by 9.4195 trillion KRW at the end of last month compared to the previous month. This increase was about 1.75 trillion KRW more than the previous month's increase of 7.6611 trillion KRW.

In particular, unsecured loans surged by 4.8495 trillion KRW compared to the previous month due to a rush of "last-minute demand" following the strengthened regulations on high-income borrowers implemented at the end of last month. Mortgage loans also increased by 4.1354 trillion KRW.

Voices expressing dissatisfaction with the authorities' pressure are also emerging.

A commercial bank official said, "Is it easy for banks to artificially block the demand that rushes in ahead of strong regulations? The government and authorities provided the factors for the surge in demand, so it is embarrassing to be scolded for not being able to stop it."

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