The Democratic Party Requests Financial Authorities to Shorten Quarterly Loan-Deposit Interest Rate Spread Disclosures to Monthly

4th Meeting of the Special Committee on Prices and Livelihoods
Measures to Enhance Transparency of Bank Interest Rate Margins
to Reduce Borrower Burden Amid Interest Rate Hikes
Call for Financial Sector to Share Pain

[Image source=Yonhap News]

[Asia Economy Reporter Hyunji Kwon] The ruling party, the People Power Party, has requested financial authorities to change the disclosure period and method of the interest rate spread between deposits and loans in order to reduce the interest burden on financially vulnerable groups amid high inflation and high interest rates.

Ryu Seong-geol, chairman of the People Power Party's Special Committee on Price and Livelihood Stability, said in a press briefing after the 4th meeting held on the 28th at the National Assembly in Yeouido, Seoul, “We have requested the Financial Services Commission and the Financial Supervisory Service to disclose the bank-by-bank interest rate spread, which is currently disclosed quarterly, on a monthly basis or to shorten the disclosure period and integrate it.” The purpose is to increase transparency in banks' deposit-loan margin operations and reduce the burden on vulnerable borrowers during the interest rate hike period.

In addition, Ryu said, “We have requested the Financial Supervisory Service and the Financial Services Commission to promote measures to improve the rationality of the calculation and operation of loan additional interest rates and to report on the situation.”

This measure is interpreted as a call for the financial sector to share the pain in response to criticism that banks are earning huge interest profits. Seong Il-jong, chairman of the Policy Committee, also emphasized at the meeting that “Even in the economic crisis situation, the five major financial groups achieved a record high profit of 11.3 trillion won in the first quarter,” and urged, “We sincerely ask for voluntary participation to ensure that there is no one-sided concentration in the deposit-loan margin through autonomous cooperation of financial institutions and on-site analysis.”

The special committee also requested the Financial Supervisory Service to extend the sale of products such as interest rate cap-type mortgage loans to secure consumer choice and to apply the ‘new balance-based COFIX (Cost of Funds Index).’

Furthermore, the committee requested the Financial Services Commission to prepare support measures for small business owners who have declared ‘pre-workout (pre-debt adjustment)’ in consultation with the Credit Recovery Committee and to push for an increase in the supply scale of the low-credit citizen loan program ‘Saehui-mang Holssi’ next year compared to this year (3.5 trillion won).