FSS Launches On-Site Inspections on Misuse of Business Loans Starting with Hana and Nonghyup Banks

Mutual Finance Sector Inspections to Start with the National Agricultural Cooperative Federation
Loan Recall and Criminal Procedures for Violations

The Financial Supervisory Service will conduct on-site inspections regarding the misuse of business loans, such as individuals purchasing apartments using loans intended for business purposes. Hana Bank, NH Nonghyup Bank, and the National Agricultural Cooperative Federation have been selected as the first targets for inspection.

On February 5, apartment sale information is posted in front of a real estate agency located within a large apartment complex in downtown Seoul. Photo by XXX

According to the financial sector on March 29, the Financial Supervisory Service will begin on-site inspections from the following day targeting Hana Bank, NH Nonghyup Bank, and the National Agricultural Cooperative Federation to investigate the misuse of business loans for purposes other than those intended.

As the government has tightened household loan regulations, cases have emerged where individuals, under the guise of business owners, take out loans for operating funds or office setup and then use these funds to pay for apartment purchases.

In relation to this, Lee Chanjin, Governor of the Financial Supervisory Service, stated at a press conference on March 26, "We will classify high-risk loans in four different sectors and initiate on-site inspections of the banking sector and mutual finance sector. We will strictly crack down on the misuse of loans for unintended purposes and pursue criminal procedures when necessary."

The Financial Supervisory Service plans to focus its inspections on high-risk loan types, such as cases where multiple homeowners have taken out business loans secured by apartments in the three Gangnam districts (Seocho, Gangnam, and Songpa) or where the business address is an apartment in one of these districts. If misuse of funds for unintended purposes is detected, the authorities plan to not only recall the loans but also notify investigative agencies and proceed with criminal procedures.

Business loans brokered by loan solicitors and secured by apartments in the three Gangnam districts will also be subject to inspection.

Additionally, the authorities plan to inspect cases in which business loans were taken out within six months of business registration, as this may indicate that the business registration was falsified to obtain loans.

A Financial Supervisory Service official stated, "We will mainly review high-risk loan cases that have occurred since June of last year, but intend to gradually expand the scope going forward."

The scope of on-site inspections is also expected to expand sequentially beyond the initial three institutions: Hana Bank, NH Nonghyup Bank, and the National Agricultural Cooperative Federation.

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