Kookmin Bank Loan Limit Reduced to 150M~200M KRW
Woori Bank Offers 0.5%p Preferential Interest Rate
Kakao Bank and K Bank Also Join Interest Rate Hike
[Asia Economy Reporter Minyoung Kim] Banks are raising interest rates on unsecured loans one after another. This move is interpreted as a response to recent financial authorities' orders to slow down the rapid increase in unsecured loans caused by "debt investment" (debt-financed investment) and "all-in loans" (loans gathered to the soul). After receiving unsecured loan management plans from major banks, the financial authorities will review whether additional measures are necessary.
According to the financial sector on the 25th, KB Kookmin Bank will simultaneously lower household unsecured loan limits and raise interest rates starting from the 29th.
The limit for unsecured loans targeting professionals will be reduced from the current maximum of 400 million KRW to 200 million KRW, and the KB Workplace Reliable Unsecured Loan limit will decrease from a maximum of 300 million KRW to 200 million KRW. The maximum limit for the non-face-to-face KB Star Unsecured Loan will also be lowered from 300 million KRW to half that amount, 150 million KRW.
Preferred interest rates will also be reduced, resulting in an overall increase of 0.1 to 0.15 percentage points in unsecured loan product interest rates, KB Kookmin Bank said.
Woori Bank also announced that starting from the 6th of next month, it will lower the maximum interest rate discount on its main unsecured loan product, "Woori Main Workplace Loan," from 1.0% to 0.6%, a 0.4 percentage point reduction.
The bank will remove the discount for utility bills and management fees (0.1 percentage points) from the preferential interest rate conditions for this product and reduce the interest rate benefits granted to companies selected as excellent companies from 0.4 percentage points to 0.2 percentage points. Additionally, the benefit for main transaction companies will be lowered from 0.2 percentage points to 0.1 percentage points. Furthermore, the event to attract new employees of excellent companies (0.1 percentage points), which was planned to continue until the end of the year, will be ended early.
KakaoBank announced that starting today, it will raise the lowest interest rate on workplace unsecured loans from an annual 2.01% to 2.16%.
K Bank also raised interest rates on unsecured loans and overdraft accounts by 0.10 percentage points and 0.20 percentage points respectively from the 18th, increasing the minimum rates to 2.11% and 2.61%.
Earlier, on the 14th, the Financial Supervisory Service held a video conference with the five major commercial banks (Shinhan, KB Kookmin, Hana, Woori, NH Nonghyup) and KakaoBank, raising concerns about unsecured loans that could be excessively used by high-income and high-credit borrowers. In response, financial companies have started their own management plans. Banks are expected to submit plans including measures to reduce total loan volume to the Financial Supervisory Service by the end of the day.
The Financial Supervisory Service requested commercial banks to report by today the household loan balances by loan category until August, monthly household loan balance plans until December, unsecured loan limit calculation plans, maximum limits per borrower, and limit calculation methods for refinancing loans from other banks.
According to the Financial Services Commission, the increase in unsecured loans in the financial sector last month reached 6.2 trillion KRW. This is 2.8 trillion KRW more than the 3.4 trillion KRW increase during the same period last year. The increase in unsecured loans in the financial sector, which was only 200 billion KRW in January this year, surged to 3.7 trillion KRW in June and 4.2 trillion KRW in July.
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