Business · Economy · 2 hrs ago
South Korea plans more staff as illegal loan reviews face delays
South Korea’s Financial Supervisory Service confirmed 853 illegal loan contracts from late March through September, with an average annual interest rate of 4,703%.
Most were very small loans: 88.9% were for less than 1 million won.
A law that took effect last year says loans charging more than 60% annual interest are invalid.
But review work is delayed: 1,485 applications were still being processed, out of 3,549 received.
The watchdog referred 62% of the cases it confirmed for investigation, while 1,554 applications were rejected or withdrawn.
The agency has only four staff issuing confirmation documents, and authorities plan to increase staffing next year and automate parts of the process.
The confirmations themselves are not legally binding, so a lawmaker says the system needs stronger measures to make contract invalidity effective.
South Korea’s financial authorities plan to add staff next year to address delays in reviewing illegal loan contracts.
The Financial Supervisory Service reviewed 853 illegal loan contracts from late March through September, finding an average annual interest rate of 4,703%.
Under a revised law, loan contracts with interest rates above 60% a year are invalid.
As of September, 1,485 applications for invalidity certificates were still being processed, while the issuing team had only four staff members.
Lawmakers also say the certificates lack legal force and that the system needs stronger safeguards.
- Who
- South Korea’s Financial Supervisory Service and other financial authorities.
- What
- Authorities plan to increase staff handling certificates that confirm illegal loan contracts are invalid, as reviews are delayed.
- When
- The staffing increase is planned for next year. The review figures cover late March through September.
- Where
- South Korea.
- Why
- The authority says rising reports have overwhelmed its four-person team, delaying certificate processing.
This story does not have two clearly opposing sides.
A revised Loan Business Act took effect, defining loan contracts with annual interest rates above 60% as invalid.
The Financial Supervisory Service began operating a one-stop support system and issuing certificates confirming the invalidity of illegal loan contracts.
The service confirmed 853 contracts invalid, while 1,485 applications remained in progress.
Financial authorities plan to increase staff handling the certificates.
- Average annual interest rate
- 4,703% across 853 confirmed illegal loan contracts
- Small loans
- 88.9% of the reviewed loans were under 1 million won
- Applications in progress
- 1,485, or 41.8% of 3,549 applications
- Staff
- Four people handle certificate issuance
- Legal threshold
- Contracts with annual interest above 60% are invalid
What people are saying
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