Up to KakaoBank... Internet Banks Also Start Reducing Loan Limits (Comprehensive)

Reduction of Credit Loan Limits for High-Credit Employees
Shinhan Bank Also Cuts Jeonse Loan Limits... Interest Grows Over Potential Expansion

[Asia Economy Reporter Kiho Sung] Following commercial banks, internet banks have also started to reduce loan limits. This is interpreted as a response to warnings from financial authorities due to the increase in bank credit loans amid the early-year craze for 'debt investment' (borrowing to invest in stocks).

According to the financial sector on the 22nd, KakaoBank is reducing the maximum limit of credit loan products for high-credit salaried workers from the existing 150 million KRW to 100 million KRW. The applicable products are the salaried worker overdraft account and salaried worker credit loan, and the new limit will apply to new loans issued from 6 a.m. on the same day.

KakaoBank explained that this is to expand mid-interest rate loans. Regarding this reduction, KakaoBank stated, "To expand mid-interest rate loans and loans for mid-to-low credit borrowers, which are the core strategic goals of the credit business sector this year, we have decided to reduce the maximum limit of high-credit loan products."

However, the industry believes that this move reflects the government's policy to suppress credit loans. Commercial banks have also started to reduce their limits.

Shinhan Bank, from the 19th, lowered the preferential interest rates on Shinhan Jeonse Loans guaranteed by Seoul Guarantee Insurance by 0.1 percentage points for each category, and raised the interest rates on Shinhan Jeonse Loans guaranteed by Korea Housing Finance Corporation and Housing and Urban Guarantee Corporation by 0.1 percentage points. Earlier, on the 15th, Shinhan Bank had also lowered the maximum limit per case by 50 million KRW for four types of salaried worker credit loans.

Since the beginning of the year, the scale of credit loans in the banking sector has been rapidly increasing. The outstanding balance of personal credit loans at the five major commercial banks?Shinhan, KB Kookmin, Hana, Woori, and NongHyup?was recorded at 135.3695 trillion KRW as of the 13th. This is an increase of 1.7213 trillion KRW compared to the end of December last year (133.6482 trillion KRW).

As credit loans increased, the Financial Supervisory Service held a video conference with loan officers from major banks on the 11th to review each bank's loan targets. The Financial Services Commission also ordered management of credit loans, which have shown signs of another surge since the new year.

KakaoBank had suspended new applications for the 'overdraft credit loan' for high-credit salaried workers from the 17th of last month until the end of the year, and started accepting applications again from the 1st. However, with this decision, the limit was reduced just three weeks after reopening.