The Financial Supervisory Service (FSS) has begun a joint inspection with the National Agricultural Cooperative Federation targeting nine agricultural co-operatives and livestock co-operatives in the metropolitan area. As loan demand shifts toward second-tier financial institutions, the FSS and the federation are inspecting the regional cooperatives where household loans have increased and are managing household loans.
According to the financial sector on the 17th, the FSS, together with the federation, conducted on-site inspections of regional agricultural co-operatives and livestock co-operatives from the 9th to the 13th. The targets of the on-site inspections were nine regional cooperatives in the metropolitan area where household loans have increased among the nationwide cooperatives. The FSS completed the inspections last week and is currently compiling and organizing the results.
An FSS official said, "Previously, financial authorities and the federation issued guidelines to regional cooperatives to prevent rapid increases in household loans," and noted, "We dispatched personnel to inspect whether the regional cooperatives are adhering to these directives."
The outstanding balance of household loans at the agricultural cooperatives has shown a steady decline this year but began to increase since October. In October, it increased by 20 billion won, and in November, it rose by 400 billion won. Since August, as banks tightened household loans, demand for loans shifted toward second-tier financial institutions. At this time, as savings banks did not lower their loan thresholds for soundness management, loan demand remained concentrated in mutual financial institutions like agricultural cooperatives.
The reason why agricultural cooperatives in the metropolitan area are under on-site inspection is attributed to the impact of the remaining balance loans for the Dunchon jugong (Seoul Olympic Park Raon). The move-in for Dunchon jugong began on the 27th of last month, along with the execution of remaining balance loans. Predictions have emerged that a total of 8 trillion won will be concentrated in these loans. However, the five major commercial banks (KB Kookmin, Shinhan, Woori, Hana, NH Agricultural Cooperative) have set a cap of about 950 billion won on remaining balance loans for household loan volume management, causing some borrowers to seek loans from mutual financial institutions. Some regional cooperatives launched what is known as "loan marketing blitz" to attract customers. On the first day of executing remaining balance loans for Dunchon jugong, 44 loans were granted at the agricultural cooperatives, totaling 22.8 billion won.
Subsequently, the agricultural cooperatives introduced policies to manage household loans by blocking non-face-to-face mortgage loans and halting the issuance of housing purchase funds for multi-homeowners in the metropolitan area on seven occasions. As a result, as December begins, the increase rate of household loans at the agricultural cooperatives has slowed compared to the same period in November.