The Difficult Loan Threshold Next Year... The Lifeline is Internet Banks

Higher Bank Loan Thresholds Next Year Due to Total Volume Regulation and DSR Strengthening
Internet Banks Face Looser Total Volume Regulations Compared to Commercial Banks
Focus on Toss, K Bank, and Others

The third internet bank, Toss Bank, scheduled to launch on the 5th, is drawing attention from the banking sector. Even before its launch, it announced the release of groundbreaking interest rate products, including the highest deposit interest rate in the banking sector at 2% per annum and a minimum loan interest rate in the high 2% range, causing tension not only among other internet banks but also among commercial banks. Especially as financial authorities tighten regulations on household loans, leading to rising loan interest rates and restrictions on loan limits, Toss Bank's announcement of unsecured loans with a maximum limit of 270 million won is expected to attract demand from so-called "loan refugees." The photo shows the Toss Bank headquarters in Gangnam-gu, Seoul, on the 4th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Jin-ho] Shin Taehyun (37, pseudonym), an office worker, is currently most concerned about loans. Since the banks' loan doors, which were closed this year, will open from next year, he is weighing the pros and cons of which bank to get a loan from. After seeking advice from acquaintances, Shin decided to take out a loan from Toss Bank. As a newly established bank, he thought it would be easier to get a loan there than elsewhere, and he judged that the interest rate in the low 3% range per annum and the maximum limit of 270 million KRW were advantageous.

Next year, household debt management will be significantly strengthened, making it as difficult to get loans from banks as this year. This is because total volume regulations are expected to become stricter, raising the loan threshold further. However, internet-only banks, which are still in the growth stage, will be subject to somewhat looser regulations, making them worth noting for consumers hoping to get loans next year.

According to the financial sector on the 31st, financial authorities, major banks, and internet banks have reportedly reached a final agreement on the household loan growth rate target. The household loan growth rate target for the five major commercial banks is in the 4% range. This is a significant tightening compared to the 5-6% range this year. Especially since jeonse loans will be included again in total volume management next year, the loan threshold at commercial banks is expected to rise sharply. There are concerns that, as in this year, loan suspension incidents may recur, centered on some banks.

On the other hand, internet banks such as K Bank and Toss Bank, which are just entering the growth stage, will be subject to household loan total volume regulations differently from general commercial banks. K Bank, which resumed operations this year after a prolonged dormant state, is expected to have a double-digit household loan growth rate target. Toss Bank, launched in early October, is reportedly assigned a triple-digit target.

This measure reflects consideration of the clear difference in asset size between major commercial banks and internet banks. Financial Services Commission Chairman Ko Seung-beom said to reporters the day before, "Newly launched internet banks like Toss Bank and K Bank have different conditions (from commercial banks)," adding, "We will decide (loan limits) differently considering those factors."

In particular, aggressive loan marketing by Toss Bank is anticipated. Toss Bank will resume loans suspended from 11 a.m. on January 1 next year. Its representative product, ‘Toss Bank Credit Loan,’ offers an interest rate in the low 3% range per annum and a maximum limit of 270 million KRW. It boasts the lowest interest rate and highest limit among major banks and internet banks.

The limits at other banks such as K Bank, Woori Bank, and Hana Bank are around a maximum of 150 million KRW. A financial sector official said, "For consumers planning to take out loans next year, internet banks are more advantageous than general banks," adding, "The convenience of non-face-to-face services, lower interest rates, and higher limits than banks will be attractive from the consumer's perspective."

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