Due to the Debt Investment Craze, Advance Preparation... 43,000 More Overdraft Accounts Opened in One Month

On the 29th, the KOSPI index is displayed on the electronic board in the dealing room of Hana Bank in Euljiro, Seoul. On this day, the KOSPI started at 3,078.73, up 9.68 points (0.32%) from the previous trading day, showing an upward trend. Photo by Moon Honam munonam@

[Asia Economy Reporter Oh Hyung-gil] More than 43,000 new overdraft accounts (Ma-tong) have been created this month alone at the five major commercial banks. This is analyzed to be due to the surge in demand for 'debt investment (debt-financed investment)' as well as the anticipation of financial authorities' plans to introduce principal installment repayment for high-value credit loans, prompting customers to open overdraft accounts in advance.

According to the five major commercial banks?KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup?as of the 28th, the outstanding balance of credit loans at these banks reached 135.4099 trillion KRW, an increase of 1.7617 trillion KRW compared to the end of last year.

The increase remains within the financial authorities' target for managing total credit loans across the banking sector, which is set at around 2 trillion KRW per month.

However, the number of newly opened overdraft accounts has steadily increased daily, resulting in a sharp rise compared to the end of last year.

From the beginning of this month through the 28th, over 19 business days, a total of 43,143 new overdraft accounts were opened at the five major banks. While the daily number was around 1,000 at the end of last year, it has risen to about 2,000 per day this month.

Accordingly, as of the 28th, the outstanding balance (used amount) of overdraft loans (limit transaction loans or automatic overdraft loans) increased by 1.2148 trillion KRW compared to the end of last year. In particular, this month, the overdraft balance increased by 500 billion KRW in a single day in line with public offering subscription schedules.

A bank official explained, "These days, overdraft accounts tend to move 200 to 300 billion KRW around the subscription dates due to public offering issues."

Another bank official said, "The recent surge in overdraft demand over the past month seems largely influenced by the sharp rise in the stock market at the beginning of the year, which has increased demand for debt-financed investment. Also, news that the government is pushing to introduce principal installment repayment for high-value credit loans has led to a tendency to avoid individual loans and instead flock to limit loans, which are known not to be subject to principal installment repayment."

In response, financial authorities have recently focused on 'managing overdraft loans.' There is a growing atmosphere of strengthening control over opening new overdraft accounts with high limits. Banks have consecutively introduced measures such as reducing overdraft loan limits or raising interest rates in awareness of this.

Woori Bank significantly reduced the maximum limit of its overdraft loan product from 80 million to 100 million KRW to 50 million KRW on the 29th. K Bank raised the overdraft loan interest rate for salaried workers by 0.1 percentage points on the 28th, increasing the minimum rate to an annual 3.0%.

KakaoBank lowered the maximum limit of credit loan products for high-credit salaried workers, including overdraft loans, from 150 million KRW to 100 million KRW on the 22nd. On the same day, Suhyup Bank completely stopped new overdraft loans for salaried workers under its 'Sh The Dream Credit Loan' product.

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