760,000 People Reduced Interest by 1.7 Trillion KRW Over 5 Years Using Interest Rate Reduction Request Rights

498.3% Increase in Applications Over 5 Years... Acceptance Rate at 38.9%

[Asia Economy Reporter Kwangho Lee] Over the past five years, 760,000 customers at 19 domestic banks have received interest rate reductions through the right to request a rate cut, saving a total of 1.7 trillion KRW in interest.

On the 27th, according to the "Bank Sector Interest Rate Reduction Request Performance Data" received by Democratic Party lawmaker Gwansuk Yoon of the National Assembly's Political Affairs Committee from the Financial Supervisory Service, a total of 759,701 customers requested and received lower loan interest rates at 19 banks from 2016 to 2020.

By year, the numbers were 115,629 in 2016, 95,903 in 2017, 115,233 in 2018, 207,455 in 2019, and 225,481 in 2020. Including 85,720 in the first half of this year, the total reaches 845,421 over five and a half years.

Since 2002, banks have voluntarily implemented a system allowing customers to request interest rate reductions if their credit status improves after taking out a loan. This right became legally established starting in 2019.

The number of requests for interest rate reductions by customers increased by 498.3% over five years, with 119,361 cases in 2016, 161,674 in 2017, 285,127 in 2018, 549,609 in 2019, and 714,141 in 2020.

On the other hand, the number of accepted requests by banks rose only 95% during the same period, from 115,629 cases in 2016 to 225,481 in 2020.

Among 2,171,695 customers who applied for interest rate reductions over five and a half years, only 845,421 actually received reduced loan interest rates, resulting in an acceptance rate (accepted cases ÷ applied cases) of 38.9%.

Looking at the acceptance rate by year, it was 96.9% in 2016, 59.3% in 2017, 40.4% in 2018, 37.7% in 2019, and 31.6% in 2020, decreasing every year. In the first half of this year, only 85,720 out of 341,783 cases were accepted, dropping the acceptance rate to 25.1%.

Lawmaker Yoon stated, "Although the legalization of the right to request interest rate reductions and the introduction of non-face-to-face applications and contract services have increased the number of people benefiting from rate cuts, some banks still lack sufficient guidance on this right." He emphasized, "Financial authorities need to devise measures to encourage financial companies to actively promote the right to request interest rate reductions."