Democratic Party: "We Will Ensure Loans for Ordinary People and Genuine Borrowers Are Not Blocked"
[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea has announced that it will ensure loans for low-income earners and genuine borrowers are not blocked.
On the 26th, Park Wan-joo, chairman of the Democratic Party's Policy Committee, said at the party's policy coordination meeting, "As people are worried that the suspension of loans by NongHyup might lead to a loan cliff, we will provide a detailed explanation," adding, "Household debt has shown a steady downward stabilization trend, but due to the continuation of low interest rates during the COVID-19 response, there has been a sharp increase since the second half of last year."
He continued, "The party and government set the household debt management target growth rate at 5-6% annually and presented household debt target rates for each financial company at the beginning of the year to manage comprehensively. However, due to the prolonged COVID-19 pandemic and low interest rates, the increase in household debt from January to July this year reached a record high of 7.88 trillion won."
While most banks have managed household loans through their own efforts, some financial institutions exceeded their annual management targets significantly as of the end of July. Chairman Park said, "The party and government will ensure that financial institutions strictly comply with household debt targets and continuously monitor them to prevent potential financial instability caused by credit expansion," adding, "We urge financial authorities to minimize confusion at loan counters and thoroughly monitor each bank to prevent a loan cliff."
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In particular, he emphasized, "Measures for genuine borrowers must never be halted in implementing household debt management targets. Financial products for housing stability, such as rental deposit loans for low-income households without homes, policy mortgages, and group loans, will continue to be supplied without interruption," and added, "The party and government will do their best to minimize public inconvenience with the mindset that the state becomes the final lender."
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