Inducing Loan Execution Within Borrower's Repayment Capacity
Early Introduction of Phased DSR Implementation…Strengthened Regulations on Secondary Financial Institutions
[Asia Economy Reporter Kwangho Lee] Financial authorities will announce additional measures on household debt next week. A 'Haetsalron Card' that can be issued even to low-credit borrowers in the bottom 10% credit score range will also be introduced.
According to the financial sector on the 23rd, the financial authorities will release additional household debt measures on the 26th. The core of this plan is to encourage loans to be executed within the borrower's repayment capacity.
The measures are expected to include the early introduction of the phased implementation of the Debt Service Ratio (DSR) by borrower, which was introduced in July, and strengthened DSR regulations on secondary financial institutions. The plan to include jeonse (key money deposit) loans under DSR regulations will be excluded.
On the 21st, at the National Assembly's Finance and Economy Committee hearing, Financial Services Commission Chairman Seungbeom Ko stated, "We reviewed the DSR regulation measures related to jeonse loans from various angles, but they will not be included in this plan."
DSR regulation limits the borrower's annual principal and interest repayment amount to a certain percentage of their annual income. However, jeonse loans, savings/deposit-secured loans, and insurance contract loans are not included in the DSR regulation.
Although financial authorities excluded jeonse loans from the total household loan volume management this year, it is uncertain whether they will be excluded next year. The additional measures to be announced next week are expected to include plans for next year as well.
To prevent unnecessary loans, measures such as setting the limit for balance loans based on the sale price and using the jeonse deposit that the prospective resident will receive as part of the balance loan screening are being discussed.
Eight Exclusive Card Companies to Sequentially Launch Haetsalron Cards
On the same day, financial authorities will launch the Haetsalron Card, a policy financial product for low-income earners.
All eight exclusive card companies?Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana, and BC?will introduce the product, launching sequentially by company. Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, and Woori cards are scheduled for release by the end of this month, Hana card in November, and BC card next year.
The Haetsalron Card is a policy financial product provided by financial authorities to the lowest credit borrowers who have difficulty obtaining credit cards, on the condition of completing credit management education and submitting income documentation.
On the premise that income verification (disposable income of at least 6 million KRW annually) is possible, individuals in the bottom 10% or lower of credit scores who complete at least 3 hours of credit management education can apply for the Haetsalron Card. The usage limit is up to 2 million KRW per month.
Only one card per person is allowed, and usage is restricted for cash advances, card loans, and entertainment/gambling industries such as karaoke bars, casinos, and real estate agencies.
Applicants who already have and use a credit card are also excluded from eligibility. The guarantee limit for Haetsalron Card payments will be differentiated by reflecting a repayment willingness index that considers internal credit evaluation, repayment history, financial education, and credit/debt management consulting.
The total supply scale of Haetsalron Cards is 50 billion KRW. Although there is no allocation of supply volume by card company, since products will be launched sequentially by company, customers are likely to flock to the companies that introduce the product first.
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