[Exclusive] When Loans for Ordinary People Tighten... Financial Public Enterprises 'Yeongkkeul' with Ultra-Low Interest Rates

1622 Employees Took Out a Total of 51.7 Billion Won in Loans... 50% Surge in 3 Years
Housing Loans See Sharp Increase Due to 1-2% Ultra-Low Interest Rates
Experts Say "If Government Loan Regulations Were Circumvented for Speculation, It's a Bigger Problem"

[Asia Economy Reporter Song Seung-seop] Last year, the scale of in-house loans at financial public enterprises under the Financial Services Commission increased by 17.4 billion KRW over three years, reaching 51.7 billion KRW. In particular, some public enterprises provided loans at ultra-low interest rates in the low 1-2% range, which were lower than those of commercial banks. As financial authorities ordered commercial banks to tighten lending due to risks related to COVID-19, a controversy has arisen over the fairness between public enterprise employees, who are in a regulatory blind spot, and ordinary citizens who face tightened credit access.

According to welfare expense data submitted on the 29th by seven public enterprises under the Financial Services Commission (Deposit Insurance Corporation, Korea Credit Guarantee Fund, Korea Development Bank, Korea Asset Management Corporation (KAMCO), Korea Housing Finance Corporation, Korea Inclusive Finance Agency, and Korea Securities Depository), a total of 1,622 employees of financial public enterprises received 51.7 billion KRW in in-house loans last year. This is a 12.54% increase from the previous year (45.9 billion KRW) and more than a 50% increase compared to 2017, when 34.2 billion KRW was used.

By product, living stabilization funds amounted to 30.2 billion KRW, an increase of 3.2 billion KRW compared to the previous year. The number of users also increased by 134 (11.54%) to a total of 1,295. For housing funds, 21.5 billion KRW was disbursed by the seven enterprises, an increase of 2.5 billion KRW compared to the same period last year. Notably, the number of users increased significantly. 327 people received housing funds, more than four times the 64 people in 2017.

In-house Loans Surge at Institutions That Lowered Interest Rates... Opposite to Authorities' Actions

In-house loans increased sharply particularly at companies that lowered interest rates. Korea Development Bank continuously reduced the interest rate on living stabilization fund loans provided to regular employees with more than six months of service. The interest rate, which was 2.71% in 2018, dropped to 1.68% by the end of last year. Benefiting from ultra-low interest rates, the number of users surged. 747 people received low-interest loans, an increase of 291 from the previous year. During the same period, the loan amount increased by 4.54 billion KRW to 15.2 billion KRW.

The Deposit Insurance Corporation also lowered the interest rates on living and housing fund loans provided to employees with more than one year of service from 2.45% to 2.15% last year. Especially for housing fund loans, the amount increased by 878 million KRW to 3.5 billion KRW. Considering the maximum housing loan limit is 80 million KRW and there are 50 users, most seem to have borrowed up to the maximum limit.

The surge in in-house loans at financial public enterprises directly contradicts the Financial Services Commission’s efforts to limit total household loans. Early last year, the FSC introduced a new loan-to-deposit ratio calculation method to curb reckless household lending. Recently, it has been pressuring commercial banks to manage loans more strictly, tightening credit loans as well as jeonse (key money deposit) and mortgage loans.

Professor Kim Sang-bong of Hansung University’s Department of Economics said, "It is inappropriate for public institutions operated with taxpayers’ money to run in-house loans contrary to the authorities’ policies. If these loans are used to circumvent government lending regulations for real estate speculation, it is an even bigger problem."

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