The financial authorities plan to announce a roadmap for household loan management policies in the financial sector for this year. This roadmap is expected to specifically include penalties for financial institutions that violate household loan management policies. It is interpreted that the financial authorities' unusual act of establishing and publicly announcing an annual household loan management policy aims to reduce market confusion through long-term policy proposals.
According to the financial authorities on the 12th, the Financial Services Commission (FSC) is establishing an annual household loan management policy together with the Financial Supervisory Service (FSS). The financial authorities are expected to make this public as soon as the detailed policy plan is finalized. A senior official at the financial authorities noted, “We are aware that there is significant public interest in household loan policy,” and “The FSC and FSS will work together to concretely establish this year’s household loan management plan and will soon announce it in the form of a press briefing or press release.” He added, “We are considering several effective measures, including imposing penalties.”
The announcement of this household loan management policy is expected to include various guidelines that financial institutions must follow. First of all, the financial authorities plan to require financial institutions to submit not only the annual total amount of loans but also monthly and quarterly totals to manage household loans so that they do not surge at specific times. Previously, the financial authorities received the annual total for household loans. This is also a self-imposed cap by banks stating that they will provide household loans up to a specific maximum level within a year.
Additionally, the specific sanctions imposed by the financial authorities on financial institutions for violating the guidelines are expected to be included. Until now, there have been no significant sanctions from the financial authorities even when household loans exceeded the annual total. It is reported that last year, Shinhan Bank, Hana Bank, and Woori Bank were among the three that surpassed their limit in household loans. Penalties are being considered to reduce the next year's total by the exceeded amount for banks that went over their limit. Kwon Dae-young, Secretary-General of the Financial Services Commission, said at a recent briefing regarding sanctions for violations of the household loan total, “I understand penalties have been imposed on banks that violated the total.” When asked about the penalty method, he replied, “The bank will reduce the amount as much as it wants by the extent it could not comply.”
It is unusual for the financial authorities to publicly announce the annual household loan policy roadmap at the beginning of the year. Normally, the financial authorities used to briefly add their household loan management plan when announcing the previous year's household loan increase or decrease. By establishing and publicly announcing an annual roadmap, it is interpreted to reaffirm the financial authorities' consistent commitment to household loan management and simultaneously reduce confusion among financial institutions and general financial consumers.
In addition to requiring monthly and quarterly total submissions, the financial authorities are considering effective management measures. A representative from the financial authorities stated, “We are still in discussions regarding detailed policy matters with related ministries such as the Ministry of Strategy and Finance,” and “Specific details will be announced as soon as inter-ministerial consultations are concluded.”