OntoUp's 'Long-cherished Wish' to Allow Investment Attraction from Savings Banks and Other Financial Institutions

The online investment-linked finance industry (Ontu-eop) will have the opportunity to attract investments from domestic financial institutions such as savings banks through the designation of innovative financial services.

On the 24th, the Financial Services Commission held a meeting with the Ontu-eop sector and announced regulatory improvement measures containing these details. These measures come in response to the worsening business environment of the Ontu-eop sector due to high interest rates and the resulting slowdown in the real estate market, despite previous regulatory improvements such as the expansion of individual investment limits and the reduction of fees for using the Korea Financial Telecommunications and Clearings Institute.

On the 9th, officials were busy moving through the corridor of the Financial Services Commission at the Government Seoul Office in Jongno-gu, Seoul, where financial authorities decided to promote a plan to include mortgage loans (Judaemae) in the 'debt refinancing' infrastructure set to launch in May by the end of the year. Financial authorities explained that the purpose is to reduce the interest burden on mortgage loans by building a debt refinancing platform that allows users to compare financial sector loan interest rates at a glance and switch loans easily. Photo by Yoon Dong-joo doso7@

First, the authorities will allow institutional investments in Ontu-eop from savings banks and other financial institutions through the designation of innovative financial services. Attracting investments from domestic financial institutions has been a long-standing goal of the Ontu-eop sector. Under current law, the Ontu-eop sector can receive linked investments from financial institutions up to 40% of the linked loan recruitment amount. However, in this case, the institution’s linked investment could be considered a loan or credit extension to the borrower, causing conflicts with individual sector laws such as the Debt Service Ratio (DSR) and Loan-to-Value ratio (LTV).

Accordingly, the authorities plan to alleviate regulatory burdens on linked investments from financial institutions such as savings banks within the year through the designation of innovative financial services. This will enable the Ontu-eop sector to attract stable investments, while financial institutions can discover new business bases. Borrowers can also expect improvements in loan conditions such as interest rates.

The investment limit for individual investors will also be further expanded. The authorities plan to increase the investment limit to a maximum of 30 million KRW (previously 5 million KRW) when individual investors invest in social infrastructure projects under the Private Investment Act, thereby expanding opportunities for stable investment returns for investors and helping social infrastructure project operators resolve funding issues.

Comparison and recommendation services for linked investment products, as well as reserved transactions, will also be permitted. The authorities will allow comparison and recommendation of linked investment products on financial product comparison and recommendation platforms through innovative financial services, and will provide guidelines to enable ‘reserved transactions’?where products are diversified according to detailed investment conditions set by investors?in a manner that does not violate the Ontu Act or the Capital Markets Act.

Additionally, to facilitate prompt loan execution, the authorities will push to shorten the disclosure period (24 hours) for asset-backed loans, and will allow Ontu-eop operators who also engage in brokerage services to receive brokerage fees from borrowers seeking loans.

The reason the authorities are taking these regulatory relief measures is that the Ontu-eop sector is facing difficulties in fulfilling its role of activating mid-interest rate loans for medium- and low-credit borrowers. Due to prolonged high interest rates and a real estate market downturn, delinquency rates have surged, institutional investments have not been made, and funding has become difficult.

A financial authority official stated, “We will promptly implement these measures to ensure the healthy growth of the Ontu-eop sector and support it in faithfully performing its role in inclusive finance, which the sector aims to achieve.”

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