"Fixed Interest Rate but We Will Raise It" Notification by ShinHyup Withdrawn After Controversy

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[Asia Economy Reporter Bu Aeri] A regional credit cooperative sent a notice to increase fixed loan interest rates but later withdrew it.

According to the financial sector on the 29th, Cheongju Sangdang Credit Cooperative recently notified fixed loan interest rate customers through a "Notice on Loan Interest Rate Changes" that the interest rate would be raised from 2.5% per annum to 4.5%.

In the notice, Cheongju Sangdang Credit Cooperative explained the reason for the increase, stating, "The U.S. Federal Reserve's tightening monetary policy aimed at economic normalization and inflation control has been fully implemented. Due to rising raw material prices caused by increased inflation and tightening measures by various countries, shocks to the global stock market continue, and the financial crisis is affecting the world."

It added, "The Bank of Korea has raised the base interest rate since August last year, currently up to 3.25%, and mortgage loan interest rates at commercial banks are approaching the 8% range, causing rapid changes in the financial environment. Therefore, we intend to change the interest rates on loans with fixed interest rates."

According to the Credit Union Basic Loan Transaction Terms, "If there is a significant change in circumstances that could not have been anticipated at the time of the contract due to rapid changes in the national economy or financial conditions before the debt is fully repaid, the cooperative may increase or decrease the rate by individual notification to the debtor."

The cooperative specified that the fixed interest rate change would be applied from January next year. It is known that 136 customers received the fixed interest rate increase notice, with loan amounts totaling approximately 34.2 billion KRW.

Following the controversy, the National Credit Union Federation instructed the cooperative to withdraw the notice. A National Credit Union Federation official said, "Although there are terms and conditions, we judged that the situation was inappropriate," adding, "We plan to post an apology and will send official notices to all cooperatives as soon as possible to prevent such incidents."

The Financial Supervisory Service also ordered restoration to the original state.

Meanwhile, amid the high-interest rate period, accidents have been occurring one after another in the mutual finance sector. Controversies arose when Donggyeongju Nonghyup and Jeju Sara Credit Union offered special high-interest promotions, attracting excessive funds and leading to appeals for cancellations.

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