Financial Authorities: "No Counter Confusion on the First Day of Maximum Interest Rate Reduction"

Loan Industry "Will Continue Operations... Need to Strengthen New Loan Screening"
Policy Finance Consultations 3,097 Cases... 131% Increase Compared to Previous Period

[Asia Economy Reporter Lee Kwang-ho] The financial authorities announced that no unusual trends occurred at financial institution counters on the first day of the statutory maximum interest rate reduction (from 24% per annum to 20% per annum) on the 7th. However, some lending companies conveyed to the financial authorities the need to strengthen screening for new loans in the future.

According to the Financial Services Commission on the 8th, the 'Maximum Interest Rate Reduction Task Force' inspected the loan market and the supply status of policy-based low-income financial services, and conducted on-site visits to high-interest sectors.

Following interviews with 11 large lending companies on the 5th and 6th, on the 7th, the task force visited 3 lending companies, 2 branches of savings banks, and the Korea Inclusive Finance Agency to check detailed trends. The Financial Services Commission, Financial Supervisory Service, Korea Inclusive Finance Agency, and industry associations have been operating the task force since the 16th of last month to support the market stabilization of the maximum interest rate reduction.

As a result of the inspection, no unusual trends were observed at financial institution counters. Some savings banks and credit card companies had already prepared by operating their maximum interest rates at 20% per annum or below, so there were no special issues. Existing high-interest loan borrowers had already been informed about the retroactive application, resulting in few inquiries.

In the lending sector, there were no unusual trends related to complaints such as loan rejections, and existing loans were also informed that the 20% rate would apply upon renewal, resulting in few inquiries. From the 5th to the 7th, the Illegal Private Lending Report Center received about 40 to 50 reports per day, similar to usual levels.

On the other hand, in policy-based low-income financial services, consultation inquiries increased on the 7th. The number of consultations that day was 3,097, which is a 131% increase compared to the average daily consultation count of 1,339 from the 28th of last month to the 6th.

In particular, the Financial Supervisory Service reported that after interviewing 11 large lending companies with significant credit loan volumes, contrary to concerns about withdrawal raised by some, all expressed their intention to continue operations after the maximum interest rate reduction. Some companies plan to reduce advertising expenses to cut costs or reduce labor and branches, and some expressed the need to strengthen screening for new loans in the future.

Additionally, the lending sector expressed expectations for government support measures to reduce costs, such as allowing bank borrowing, permitting online platform mediation, and lowering lending brokerage fees, and stated that most excellent low-income financial lending companies plan to apply.

Furthermore, during on-site visits conducted by the Financial Services Commission regarding the maximum interest rate reduction, lending companies suggested the need to promptly implement the excellent low-income financial lending company policy, provide incentives to companies participating in the government's efforts to revitalize loans for low-credit borrowers, and support them to shed the negative image of existing lending companies.

The financial authorities stated, "Related agencies will continuously monitor market trends and share on-site situations through the Maximum Interest Rate Reduction Task Force and take proactive measures if necessary," adding, "We will continue to promote the maximum interest rate reduction and government support projects during the intensive publicity period in July, and actively respond to concerns about the spread of illegal private lending through the 'Illegal Private Lending Special Eradication Period' which has been operating for four months."

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