Financial Authorities Recommend Toss Bank to Limit Credit Loans Within Annual Salary

[Asia Economy Reporter Kiho Sung] As Toss Bank, the third internet-only bank, launched on the 5th, financial authorities reportedly requested that its unsecured loan limit be restricted to within the borrower’s annual income, just like other banks. This appears to be due to concerns that Toss Bank’s unsecured loan limit of 270 million KRW could lead to a concentration of loans.

According to the financial sector on the 5th, the Financial Supervisory Service reportedly asked Toss Bank last month to limit unsecured loan amounts to within “100% of the borrower’s annual income.”

Earlier, in August, financial authorities had requested at a meeting with credit officers from various banks that unsecured loan limits be reduced to within the borrower’s annual salary. Accordingly, major commercial banks have been reducing unsecured loan limits to within 100% of the borrower’s annual income.

On the day of its launch, Toss Bank announced a maximum unsecured loan limit of 270 million KRW. However, following the financial authorities’ recommendation, it is expected that the unsecured loan limit will be restricted to within the borrower’s annual salary.

Additionally, financial authorities reportedly conveyed to Toss Bank the request to cooperate with the government’s household loan management policies. Accordingly, Toss Bank is expected to be subject to the same regulations as commercial banks, including the Debt Service Ratio (DSR) regulation and mortgage loan restrictions.

However, since Toss Bank started operations this year, the regulation to limit this year’s increase rate to 5-6% compared to last year’s household loan balance is not expected to apply.

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