Tightening Personal Loans Again... Shinhan Bank Reduces Limit to 50 Million Won

Maximum limit reduced from 150 million to 200 million won to 100 million to 150 million won
Credit loans at 5 major banks increase by 1.7 trillion won this year amid 'Debt Investing' craze

[Asia Economy Reporter Kangwook Cho] Shinhan Bank has lowered the maximum limit for employee credit loans by 50 million KRW. This is interpreted as a response to a warning message from financial authorities amid a resurgence in bank credit loans due to the 'debt investment (debt-financed stock investment)' craze since the beginning of the year.

According to the financial sector on the 16th, Shinhan Bank decided to reduce the maximum limit of its credit loans 'Elite Loan' and 'Solpyeonhan Employee S', which are targeted at large and high-quality companies with which it has agreements, by 50 million KRW starting today. Accordingly, the maximum limits for these products will change from 150 million to 200 million KRW to 100 million to 150 million KRW.

However, the overdraft loan limit remains at the existing level of around 100 million KRW.

Shinhan Bank explained, "This is a preemptive measure to manage household debt risks amid a rapid increase in household loans due to the overheated stock market," adding, "There is no significant problem for ordinary employees to receive credit loans."

Earlier, last month, Shinhan Bank uniformly reduced the credit loan limit for professionals such as doctors and lawyers from 250 million to 300 million KRW to 200 million KRW.

Since the beginning of the year, the scale of bank credit loans has been rapidly increasing. As of the 13th, the outstanding balance of personal credit loans at the five major commercial banks?Shinhan, KB Kookmin, Hana, Woori, and Nonghyup?was 135.3695 trillion KRW. This is an increase of 1.7213 trillion KRW compared to the end of December last year (133.6482 trillion KRW). Simply calculated, this means an increase of about 130 billion KRW per day.

Due to the tightening by financial authorities, banks implemented high-intensity regulations such as suspending new loan product issuance, causing the growth rate, which had sharply declined at the end of last year, to rapidly surge again as soon as the new year began.

It has been identified that a total of 18,660 new overdraft accounts were opened at these banks from the 1st to the 13th of this month.

As signs of a surge in credit loans appeared, the Financial Supervisory Service held a video conference with loan officers from major banks on the 11th to review the trends and causes of household loan increases, including credit loans, and to check each bank's loan targets.

Additionally, the Financial Services Commission ordered the banking sector to manage the credit loans, which have shown signs of another surge since the new year.

On the 12th, Do Kyusang, Vice Chairman of the Financial Services Commission, presided over a Financial Risk Response Team meeting via video and said, "We ask banks to strengthen special management of recently surged high-value credit loans, especially those that are difficult to view as emergency living or business funds."

Vice Chairman Do emphasized, "We will make every effort to manage the increase in credit loans by closely monitoring whether credit loan funds are concentrated in specific asset markets and by strengthening bank management."

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