Despite Soaring Loan Interest Rates, Financial Authorities Who Claimed No Intervention Eventually Hold Emergency Meeting with Banks

Financial Supervisory Service to Convene Deputy General Managers in Charge of Loans at Major Banks Tomorrow at 3 PM

[Asia Economy Reporter Jin-ho Kim] Despite the sharp rise in loan interest rates, the financial authorities, who had insisted on 'no intervention,' are finally convening banks urgently. They plan to review the loan interest rate calculation system and, if necessary, overhaul it. This move is interpreted as a response to public criticism that the authorities have been passive despite the rapid increase in interest burdens on low-income households.

On the 18th, the Financial Supervisory Service announced that tomorrow at 3 p.m., it will hold a meeting chaired by the Senior Deputy Governor with deputy heads in charge of loans from major commercial banks to inspect the operation of the loan interest rate calculation system. The meeting will be attended by deputy heads in charge of loans from eight banks including KB Kookmin Bank, Shinhan Bank, Woori Bank, Hana Bank, NH Nonghyup Bank, IBK Industrial Bank, SC First Bank, and Citibank, as well as executives from the Korea Federation of Banks.

This is to review the rising interest rate trend observed during the transition from a credit expansion phase to a credit contraction phase and to promote improvements if necessary. Recently, as market interest rates have rapidly surged, mortgage loan interest rates are on the verge of surpassing 5% per annum, and interest rates on jeonse loans and unsecured loans have also risen sharply by more than 1 percentage point within a year.

Accordingly, the Financial Supervisory Service is expected to emphasize transparency and rational operation of banks' loan interest rate calculation systems at tomorrow's meeting. They will examine whether the abolition of preferential interest rates by banks, following the tightening of household loans, was appropriate. Additionally, measures to activate the right to request interest rate reductions will be discussed to help reduce the interest burden on financial consumers during this period of rising rates.

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