Sanghyuk Park Proposes Amendment to Loan Business Act to Distinguish Licensed Loan Businesses from Illegal Private Loans
The Maximum Interest Rate for Illegal Private Loans is 6% per Year
On the 22nd, Park Sang-hyeok, a member of the Democratic Party of Korea, announced the proposal of an amendment to the Loan Business Act aimed at protecting financial consumers from illegal private loans.
According to the amendment, operators who have not registered or renewed their registration for loan business will be defined not as 'unregistered loan operators or intermediaries' but as 'illegal private loan operators or intermediaries.' Additionally, the maximum interest rate for illegal private loan operators will be lowered from the current annual 20% to the statutory interest rate of 6% per year under the Commercial Act, and the debtor's right to claim the return of illegal profits will be expanded. Fines for illegal private loan operators will be increased, and the Financial Supervisory Service's investigative authority will be strengthened.
The current Loan Business Act imposes regulations such as loan business registration and maximum interest rate limits to restrict high interest rates and illegal business practices in the private loan market. However, the current law collectively refers to both legitimate loan businesses and illegal private loans as 'loan businesses,' making it difficult for consumers to distinguish between them. There have also been calls to lower the maximum interest rate for unregistered operators conducting illegal business to eliminate factors contributing to illegal operations.
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Representative Park stated, "As the economic downturn prolongs due to high interest rates and inflation, the number of ordinary citizens using loan services is increasing. We will strive to protect the public from illegal private loans that exploit difficult circumstances and to enable them to safely use financial services within the institutional framework and restore stable daily lives."
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