Even Bankers Eye 'Kabang Matong'... Who Can Get a 20 Million Won Credit Loan? (Comprehensive)

Bankers 'Limit Credit Loan Amount'...Inevitable to Subscribe to Other Companies' Loan Products

[Asia Economy Reporter Park Sun-mi] Kim Jin-myung (43, pseudonym), a deputy manager at a major commercial bank in City A, recently borrowed 35 million won through KakaoBank (K-Bank)'s credit loan product with an annual interest rate of 2.64% due to urgent financial needs. Although he could have taken out a loan at his own bank, the loan limit was far too low for the amount he needed. In the past, he used loan products from other banks that came to the bank headquarters for sales, but since K-Bank offered a higher limit and lower interest rates than his bank, he switched to being a K-Bank customer. Kim said, "Others take out bank loans to invest, but for bank employees, it is actually harder to get loans due to regulations," adding, "Among bank employees, using K-Bank's easy-to-access non-face-to-face credit loan 'K-Bank Overdraft Account' has become the trend."

Bank employees are borrowing money from internet-only banks due to loan limit regulations. They are supplementing funds insufficient from their own banks through relatively low-interest internet-only banks. Some voices express dissatisfaction, saying they are being unfairly discriminated against due to strict internal control regulations, and argue that since the law was enacted in 1998, loan limits should be raised in line with income and inflation rates.

According to the banking sector on the 29th, employees of commercial banks can only borrow up to 20 million won within their workplace due to the Banking Supervision Regulations. The Banking Supervision Regulations set limits in Article 56 (Loans to Bank Executives and Employees) under Section 6 Prohibited Business: general fund loans are limited to 20 million won, and housing fund loans (including general fund loans) are limited to 50 million won.

"The era of easily getting loans because you work at a bank is over"
Due to Banking Supervision Regulations, loans over 20 million won require borrowing from other banks

The notion that it is easy to secure funds because you work at a bank is a thing of the past. At one time, banks offered their employees credit loans at ultra-low interest rates in the 1% range, but now employees receive the same interest rates as general customers and can only borrow up to 20 million won due to the Banking Supervision Regulations. This is why employees at banks, many of whom earn salaries in the hundreds of millions of won and have top credit ratings, have to look for loan products from other banks if they want to borrow more than 20 million won.

Due to the non-face-to-face feature, Hana Bank's Hana OneQ credit loan product is as popular among bank employees as K-Bank's. According to the office of Oh Ki-hyung, a member of the Democratic Party, from January to August this year, the increase rate of credit loans among financial institution employees was highest at Hana Bank at 32.3% among the five major banks. Hana Bank sets the average interest rate for credit loans for financial institution employees at around 2%.

"Outdated reverse discrimination" VS "Must be maintained to prevent financial accidents"

Within the banking sector, as loan-taking has become commonplace to the extent that new terms like 'young-chul' (borrowing everything) and 'debt investment' have emerged, there is dissatisfaction that limiting credit loans for bank employees to 20 million won is actually outdated reverse discrimination. In fact, many bank employees take out credit loans up to the 20 million won limit and then use loan products from other banks when they need additional funds.

A senior bank executive said, "There is even talk within the banking sector that bank employees are major customers of K-Bank," pointing out, "Bank employees sell low-interest loan products to customers but ironically cannot subscribe to these products themselves and have to sign loan applications at other banks." Another bank employee said, "The loan regulations for bank employees have not changed since the Banking Supervision Regulations were created during the 1998 IMF financial crisis," adding, "While the intention to prevent financial accidents among employees is understandable, there is a need to improve limits to reflect current realities."

On the other hand, some voices argue that the loan limit restrictions for employees should be maintained to prevent financial accidents. Even if employees receive loans under the same conditions and interest rates as general customers, since loan screening is conducted by colleagues, the act of borrowing itself could exert implicit pressure and potentially lead to financial accidents.

Banks operate welfare programs such as providing a certain amount of support for jeonse (key money deposit) housing and participating in contracts for company-leased housing to assist employees facing reverse discrimination in credit loans, but these are also criticized as outdated. Many banks limit the price of contracted jeonse housing to about 150 million won in Seoul, which does not adequately reflect the current situation of rapidly rising jeonse prices.

Meanwhile, according to Statistics Korea, the average loan amount per wage worker last year exceeded 40 million won. The average loan amount was highest among those in their 40s at 62.05 million won, followed by those in their 30s (56.16 million won) and 50s (51.34 million won). By income bracket, wage workers earning less than 30 million won had an average loan of 26.25 million won, while those earning over 100 million won recorded 151.51 million won. Wage workers at large companies had an average loan of 66.88 million won, an 8.4% increase from the previous year. By industry, wage workers in finance and insurance had the highest average loan amount at 85.9 million won.