The financial authorities are pushing measures to block unsecured loans from lending businesses to military personnel at the source. As more lenders target service members, the view is that they should be protected similarly to financially vulnerable groups.
On the 24th, according to the financial authorities, the Financial Supervisory Service is discussing with the Korea Lenders Association ways to restrict unsecured loans that service members obtain based on copies of their salary accounts. The reason is that pay received during service is not considered continuous income, unlike income verification recognized by banks. The Financial Supervisory Service and the association are continuing talks with the ultimate goal of an outright ban on lending operations targeting service members. On Apr. in the , the authorities even directly asked some lending businesses to restrict loans to active-duty soldiers.
Tailored financial education aimed at service members will also be strengthened. The Financial Services Commission decided at the 1st Financial Education Council on the 16th to strengthen education so that service members' lump-sum savings do not lead to indiscriminate investments. The Financial Supervisory Service recently began financial consulting aligned with service cycles together with the Ministry of National Defense. An official at the Financial Supervisory Service said, "Active-duty service members are close to financially vulnerable people who do not yet have a job. Protective measures commensurate with that are needed."
These steps follow a rise in lending operations targeting service members as more invest in stocks and virtual assets. According to the authorities, the amount of debt adjustment for service members rose from 5.6 billion won in 2021 to 10.2 billion won last year. Some service members were found to have used loans from lending businesses to raise funds for stock or virtual asset investments.
So-called "loyalty loans" and "sergeant loans" targeting service members have been offered as unsecured loans with limits up to 15 million won at high interest rates approaching 20% a year. The authorities believe high-interest debt incurred during military service holds back people in their 20s and plan to establish a system to ban lending operations targeting soldiers along with financial education at the start of service.
Earlier this year, Financial Supervisory Service Governor Lee Chan-jin and Korea INclusive Finance Agency (KINFA) President Kim Eun-kyung visited military units to conduct financial education and communicate with service members. At a recent monthly meeting, Lee emphasized the need for financial education for soldiers, saying, "We are providing periodic, systematic financial education to strengthen service members' financial capabilities, but when you go to the field, the situation is truly serious."