Considering Transition to 'Repayment Ability Assessment per Borrower Unit' in DSR Management Method
[Asia Economy Reporter Kwangho Lee] The government is considering a plan to flexibly apply the Debt Service Ratio (DSR) to young people and those with temporary income reductions in loan regulations that reflect the borrower's actual repayment ability.
According to financial authorities on the 31st, the Financial Services Commission is reportedly considering switching the current DSR management method by financial institutions to an assessment of repayment ability on a borrower-by-borrower basis.
DSR refers to the ratio of the principal and interest repayment amount of total financial debt to the income of the person seeking a loan.
The Financial Services Commission plans to reflect the expected future income of groups who currently have no income in the process of reflecting the borrower's actual repayment ability. This includes low-income young people and those with temporary income reductions.
The Financial Services Commission will utilize data such as average wages by occupation from Statistics Korea. The 'Household Debt Advancement Plan,' including such loan regulations, is expected to be released around March.
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