Financial Supervisory Service Holds Bank Household Loan Inspection Meeting "Strengthening Loan Screening and Managing Growth Rate"

Financial authorities urged banks to manage household loans by strengthening loan screening.

On the morning of the 8th, Park Chung-hyun, Deputy Director of the Banking Division at the Financial Supervisory Service, held a meeting with vice presidents from nine banks including KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, Daegu, Busan Banks, as well as Kakao Bank and Toss Bank, to analyze the causes of household loan increases and discuss countermeasures.

Household loans in the financial sector increased by 6.3 trillion won in October, marking the highest growth in 25 months since September 2021 (7.8 trillion won).

The Financial Supervisory Service requested that while continuing to supply funds focused on actual demand, banks should manage the increase at an appropriate level by strengthening loan screening within the borrower’s debt repayment capacity rather than imposing excessive interest rate hikes.

Banks analyzed that the increase in household loans in October was due to a temporary expansion in unsecured loan demand and increased supply to actual demand borrowers through programs such as Didimdol. Among the 5.8 trillion won increase in mortgage loans in the banking sector in October, Didimdol and Buteemok loans accounted for 64.9%. Banks plan to gradually reduce household loans other than policy funds for actual demand borrowers from this month onward.

Deputy Director Park urged banks to prepare thoroughly for the introduction of variable interest rate stress tests and the total debt service ratio (DSR).

Banks also stated that they will re-examine their future household loan handling plans and operate without any disruption in risk management such as repayment ability screening.

Financial Supervisory Service, Yeouido, Seoul. Photo by Jinhyung Kang aymsdream@

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