'Ineffective' Financial Authorities' Total Volume Regulation... 18 Savings Banks Did Not Comply

18 Savings Banks See Household Loan Growth Exceed 21%
Loan Marketing Continues Despite Financial Authorities' Warnings
Some Firms Benefit from 200% Increase in Household Sector
Will Total Household Loan Regulations Disappear for Savings Banks?

Last year, it was revealed that 25% of savings banks did not comply with the financial authorities' total household loan regulations. Despite warnings and concerns from the financial authorities, the companies focused on increasing loans without regard. As doubts about the effectiveness grow, public opinion supporting the abolition of total loan regulations by President-elect Yoon Suk-yeol is also expected to gain momentum.

According to the savings bank industry on the 1st, out of the total 79 savings banks last year, 18 exceeded the household loan total limit recommended by the financial authorities. This means that one out of every four banks violated the regulations.

The Financial Supervisory Service delivered the 'Savings Bank Household Loan Management Plan' last year to curb the sharp increase in loans. The plan aimed to limit the annual household loan growth to 21.1% (KRW 5.5 trillion) compared to the previous year. Additionally, it required that high-interest household loans, excluding mid-interest loans and policy financial products (such as Haetsal Loan and Saitdol Loan), be restricted to within 5.4%.

The bank with the highest growth rate was Central Savings Bank, whose household loan balance increased by 198.3% in one year. Minguk Savings Bank (146.6%) and Daeshin Savings Bank (77.8%) also showed high growth rates. In particular, household loans at major financial group-affiliated savings banks such as KB Savings Bank (52.0%), Shinhan Savings Bank (36.8%), Hana Savings Bank (36.7%), and NH Savings Bank (32.5%) also increased significantly.

Will Total Household Loan Regulations Disappear for Savings Banks?

The reason such operations were possible is that the total loan regulation was designed to be observed by 'industry sector' rather than by 'individual company.' Even if an individual company exceeds 21.1%, as long as the total for the entire sector is controlled, it is acceptable. This means that when other companies restrain household loans following the financial authorities' recommendations, a single company can gain significant profits by aggressively operating in the household loan sector. Industry insiders have expressed dissatisfaction, saying, "While large savings banks complied with the regulations, medium and small-sized savings banks enjoyed the benefits."

In response, the financial authorities recognized the problem and prepared countermeasures. They implemented special management and monitoring and issued warnings to some companies, advising them not to treat the current situation as a business opportunity. A plan was also devised to apply a differential of 10.8?14.8% depending on compliance with the total household loan regulations this year.

Nevertheless, many evaluations suggest that the savings banks that violated the regulations benefited. Although they were subject to stricter total loan limits than other companies, they increased household loans significantly, so their losses were not substantial.

As the financial authorities' regulations through recommendations failed to be effective for many savings banks, debates about their effectiveness are expected to intensify. President-elect Yoon has pledged to ease loan regulations.

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