Banks to Establish 'Real Demand Screening Teams' Following Woori Bank's Lead

Discovering Practical Screening Cases Centered on the Korea Federation of Banks

A meeting between Lee Bok-hyun, Governor of the Financial Supervisory Service, and bank presidents was held on the 10th at the Bankers' Hall in Myeong-dong, Seoul. Governor Lee is delivering the opening remarks. Photo by Heo Young-han younghan@

Heads of domestic banks have announced plans to create 'dedicated review teams for genuine borrowers,' similar to Woori Bank, to supply household loan funds centered on genuine demand.

According to the Financial Supervisory Service (FSS), during a meeting held on the 10th between FSS Governor Lee Bok-hyun and the heads of 18 banks, the bank leaders mentioned that they would operate dedicated review teams for genuine borrowers to minimize harm to well-intentioned customers through consultation and screening.

The participants, convened by Governor Lee to discuss measures against the recent surge in household loans, emphasized that some commercial banks, which found it difficult to control the pace of household loans due to unexpected demand spikes in July and August, had no choice but to establish and operate their own management plans.

According to the FSS, most banks commonly plan to strengthen credit screening for loans that appear to be speculative demand, such as those for owners of two or more houses. Some banks, which have already exceeded their household loan management plans and require urgent control, are applying stricter standards than others. They explained that they plan to strengthen screening not only for jeonse (key money deposit) loans that could be used for gap investments and loans for homeowners purchasing additional houses without immediate residential purposes, but also for unsecured loans.

The remaining banks, which have been managing household loans since the beginning of the year, are operating relatively relaxed standards and plan to continue supplying funds focused on genuine borrowers within the loan capacity outlined in their management plans.

Regional banks also plan to supply funds primarily to genuine borrowers within their areas, while internet-only banks have been moderating the growth rate since the beginning of the year. Internet-only banks also mentioned that they will continue to support inclusive finance for low- to medium-credit borrowers.

The bank heads agreed to discuss continuously improving the process by discovering and sharing review cases related to distinguishing genuine demand through the Korea Federation of Banks. Since it is difficult to clearly distinguish between genuine and speculative demand, screening standards inevitably vary by bank, but they emphasized that various efforts are being made to prevent harm to well-intentioned loan applicants due to strengthened credit screening.

FSS Governor Lee Bok-hyun urged, "Rather than applying the same standards to specific borrower groups across all banks, please respond autonomously according to each bank’s circumstances," and added, "Household loan management should not be viewed as a short-term management issue for individual banks but requires continuous autonomous efforts by the banking sector from a macroeconomic and long-term perspective."