Kakao Bank headquarters in Bundang-gu, Seongnam, Gyeonggi Province. News1
Moves to limit credit loan ceilings, including overdraft accounts known as “minus accounts,” are spreading to internet-only banks. Kakao Bank, K Bank and Toss Bank, the country’s three internet banks, are all moving to tighten lending. The move is aimed at responding to a surge in “debt-financed investment” driven by a buoyant stock market.
According to the financial industry Monday, Kakao Bank will reduce the maximum ceiling on minus accounts (credit-line loans) from the current 240 million won to 100 million won starting on the 22nd. In addition, beginning next month, when extending minus accounts with a contracted amount of 50 million won or more, the bank will cut ceilings by up to 20% for accounts whose utilization rate over the past six months was 20% or less.
Toss Bank will also soon reduce its ceilings to a maximum of 100 million won for credit loans and 50 million won for minus accounts. Its previous loan ceilings were 300 million won and 150 million won, respectively. K Bank will suspend new minus account sales from Monday through the end of next month.
These measures came in full force following stronger oversight by financial authorities and voluntary measures by commercial banks. Earlier, the Financial Services Commission (FSC) held a household debt review meeting on the 11th and activated an emergency household loan management system. It also said it would intensively monitor financial firms that fail to comply with targets on a weekly basis. In response, commercial banks rolled out a series of measures including loan ceiling limits, suspension of loan switching, and reductions in preferential interest rates.
Tightening of Credit Loans and Minus Accounts Spreads to “Stop Debt-Financed Investment”
KB Kookmin Bank will reduce the maximum ceiling on general credit loans to 100 million won and minus accounts to 50 million won starting Monday. Earlier, Hana Bank on the 12th capped the maximum amount available when applying for a credit loan at 100 million won regardless of a borrower’s annual income. Even high earners will no longer be able to receive more than 100 million won through credit loans.
Shinhan Bank will also restrict non-face-to-face credit loan applications if the combined volume of face-to-face and non-face-to-face credit loan applications exceeds internal standards. Nonghyup Bank will cut preferential interest rates applied to mortgage loans and credit loans by 0.2 percentage point and 0.1 percentage point, respectively. Woori Bank said it will suspend applications for non-face-to-face credit loan switching products and halt all credit loan applications coming through loan comparison platforms such as Kakao Pay, Naver Pay, Finda and Toss.
Behind the banking sector’s move to tighten lending is expanding demand for stock investment using leverage. According to the FSC, household loans across all financial sectors rose by 9.3 trillion won last month. The increase was driven by credit loans, which rose by 3.4 trillion won in May after declining by 900 billion won in April, shifting to an upward trend.
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