KakaoBank Reduces Credit Loan and Revolving Credit Limits by 20 Million Won Each

[Asia Economy Reporter Seong Giho] KakaoBank is reducing the credit loan and overdraft account limits by 20 million KRW each. Following the four major commercial banks reducing overdraft limits to 50 million KRW, KakaoBank is lowering it further to 30 million KRW. With the continuous reduction of credit loans, it is expected to become even more difficult to obtain new loans.

On the 8th, KakaoBank announced that starting from that day, it will reduce the maximum limits for credit loans and overdraft loan products by 20 million KRW each.

The maximum credit loan limit will decrease from the existing 70 million KRW to 50 million KRW, and the overdraft loan limit will decrease from 50 million KRW to 30 million KRW. This loan limit reduction will apply to new contracts from 6 a.m. on the 8th.

A KakaoBank official stated, "To manage the total household loan volume, we decided to reduce the maximum limits for high-credit loan products. However, KakaoBank will maintain the existing limits for mid-credit loan products such as Mid-Credit Loan and Mid-Credit Plus Loan, which are designed for customers with medium to low credit."

Previously, commercial banks reduced the new overdraft account limits, making it impossible to receive overdraft accounts exceeding 50 million KRW from the four major commercial banks (KB Kookmin, Shinhan, Hana, Woori).

KB Kookmin Bank reduced the maximum limit for newly issued overdraft accounts from 100 million KRW to 50 million KRW starting from the 7th. This measure follows the financial authorities' recommendation to manage total household loans and reduce credit loan limits.

Hana Bank also uniformly lowered the overdraft account limits to 50 million KRW from the 27th of last month, which previously varied by product. Woori and Shinhan Banks operate major overdraft account products with limits up to 50 million KRW. On the other hand, NH Nonghyup Bank is the only major bank that still offers overdraft account limits up to 100 million KRW. However, this is restricted to within the annual income.

A commercial bank official explained, "As it has become more difficult to obtain loans recently, there is an increase in 'excess demand' where people try to get loans in advance, mainly through overdraft accounts. To manage this excess demand, limits are being reduced."