LENDING & CREDIT | Staff Reporter, Korea

South Korea mulls tightening rules on overdrafts: report

Household debt reached a record high of $1.47t in June.

South Korea is considering tightening rules on overdrafts amidst concerns with the country's already-high household debt, reports Yonhap News Agency, based on a statement from the finance minister during a parliamentary session.

Locals reportedly took out overdrafts in recent months to meet demand for property-related costs and invest in stocks amidst low interest rates, a result of the government s tightening rules on mortgage lending in order to curb rising housing prices.

Finance Minister Hong Nam-ki said the government is considering taking measures to cope with a sustained rise in credit loans.

"The government is closely watching the household debt problem and is trying to actively respond to it," Hong said at the parliamentary meeting on the budget review.

Banks' non-mortgage loans amounted to 254.3 trillion won (US$227.9b) as of end-October, up 3 trillion won from the previous month, according to central bank data.

South Korea's household credit reached a record high of $1.47t (KRW1,637.3t) as of end-June, up $23b (KRW25.9t) from three months earlier.

The county's household debt is repeatedly cited as the main drag on Asia's fourth-largest economy, as households' high indebtedness is feared to curb domestic demand and thus crimp economic growth, reports Yonhap.

Photo couresty of Sesinado (Pexels).

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