Household loan 'Balloon effect' wriggle...Financial authorities urgently convene second financial sector

Financial authorities urgently convene financial associations and individual companies as they believe that the increase in household debt in non-banking sectors is unusual.

The Financial Services Commission and the Financial Supervisory Service will call officials from mutual finance, insurance companies, savings banks, credit-specialized financial companies and associations to order strengthening household debt management the day after tomorrow (15th).

This is because as the banking sector tightened household loans, there were signs of demand flocking to the second financial sector.

An official from the financial authorities said household loans in the second financial sector are not stable, and there is a possibility that the increase in household loans in the second financial sector may exceed KRW 1 trillion this month.

If household loans in the second financial sector increase by more than KRW 1 trillion, it will be the first time in two and a half years since May 2022.

In particular, the second financial meeting included individual financial companies that showed or were concerned about the increase in household loans, such as Saemaul Geumgo, National Agricultural Cooperative Federation, Samsung Life Insurance and Kyobo Life Insurance.

Financial authorities plan to implement additional measures if the loan movement from the banking sector to the second financial sector begins in earnest.