Shinhan Bank, Up to 20% Limit Reduction if 'Matong' Is Not Used After Approval

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[Asia Economy Reporter Kwangho Lee] Following KB Kookmin, Hana, and Woori Banks, Shinhan Bank has also decided to reduce the loan limits for customers who have opened a minus account (overdraft) but do not use it.

According to the financial sector on the 7th, starting today, Shinhan Bank will reduce the limit by up to 20% when extending or renewing overdraft accounts with limits exceeding 30 million KRW if the usage rate of the limit during the contract period or three months before maturity is less than 10%.

For example, if a minus account with a limit of 30 million KRW is opened and less than 10%, i.e., 3 million KRW, is used, the limit will be reduced to 24 million KRW upon product extension or renewal.

Currently, banks are reducing credit loan limits or lowering preferential interest rates on mortgage and jeonse loans in accordance with the financial authorities' recommendations to strengthen household loan management.

Earlier, Woori Bank has been reducing the limit by 20% upon extension or renewal if less than 5% of the overdraft limit is used on 28 products, including Woori Main Workplace Employee Loan, WON Workplace Employee Loan, and Workplace Employee Preferential Credit Loan, since last month.

KB Kookmin Bank has also been implementing a system since the end of July last year to reduce loan limits based on usage rates when extending or renewing overdraft accounts exceeding 20 million KRW. If the average loan limit usage rate from the new overdraft contract (extension) date to three months before maturity is 10% or less, the limit is reduced by 20%.

Hana Bank also provides screening criteria indicating that for its non-face-to-face credit loan product, Hana OneQ Credit Loan, the limit can be reduced by up to 50% if the overdraft limit usage is low at the time of extension, or the entire limit can be reduced if the limit is unused throughout the loan period.

An official from a bank said, "The reason for reducing overdraft limits is to manage the total volume of household loans," adding, "By reducing unused limits, the bank secures lending capacity, which will be used as resources to provide loans to more customers."

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