Higher Bank Loan Thresholds Next Year Due to Total Volume Regulation and DSR Strengthening
Internet Banks Face Looser Total Volume Regulation Compared to Commercial Banks
[Asia Economy Reporter Kim Jin-ho] Shin Taehyun (37, pseudonym), an office worker, is currently most concerned about loans. Since the banks' loan doors, which were closed this year, will open again next year, he is weighing the pros and cons of which bank to get a loan from. After seeking advice from acquaintances, Shin decided to take a loan from Toss Bank. As a newly established bank, he thought it would be easier to get a loan there than elsewhere, and he judged that the interest rate in the low 3% range per annum and the maximum limit of 270 million KRW were advantageous.
Next year, household debt management will be significantly strengthened, making it as difficult to get loans from banks as this year. This is because total volume regulations are expected to become stricter, raising the loan threshold further. However, internet-only banks, which are still in the growth stage, will be subject to somewhat looser regulations, making them worth noting for consumers hoping to get loans next year.
According to the financial sector on the 31st, the financial authorities, major banks, and internet banks have reportedly reached a final agreement on the target growth rate for household loans. The target growth rate for household loans at the five major commercial banks is in the 4% range. This is a significant tightening compared to the 5-6% range this year. Especially next year, as jeonse loans will be included again in total volume management, the loan threshold at commercial banks is expected to rise sharply. There are also concerns that loan suspension incidents, centered on some banks as this year, may recur.
On the other hand, internet banks such as K Bank and Toss Bank, which are just entering the growth stage, will be subject to different total volume regulations for household loans compared to general commercial banks. K Bank, which resumed operations this year after a period of inactivity, is expected to have a double-digit target growth rate for household loans. Toss Bank, launched in early October, is reportedly assigned a triple-digit target.
This measure reflects consideration of the clear difference in asset size between major commercial banks and internet banks. Financial Services Commission Chairman Ko Seung-beom said to reporters the day before, "Newly launched internet banks like Toss Bank and K Bank have different conditions (compared to commercial banks)," adding, "We will decide (loan limits) differently considering those factors."
In particular, aggressive loan marketing by Toss Bank is anticipated. Toss Bank will resume loans suspended from 11 a.m. on January 1 next year. Its flagship product, the ‘Toss Bank Credit Loan,’ offers an interest rate in the low 3% range per annum with a maximum limit of 270 million KRW. It boasts the lowest interest rate and highest limit among major banks and internet banks. K Bank’s credit loan product also features a maximum limit of 150 million KRW with an interest rate in the mid-3% range.
A financial industry official said, "For consumers planning to take out loans next year, internet banks are more advantageous than general banks," adding, "The convenience of non-face-to-face services, lower interest rates, and higher limits than banks will be attractive from the consumer’s perspective."
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