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Banks urged to set up tighter supervision of household debts

All News 10:34 August 10, 2021

SEOUL, Aug. 10 (Yonhap) -- A top financial regulator called Tuesday for banks to set up tighter supervision of household debts as policymakers voiced warnings against growing financial imbalances amid a surge in home prices.

Eun Sung-soo, the outgoing chairman of the Financial Services Commission (FSC), made the remarks at a meeting with chief executives of financial holding firms earlier in the day.

Eun also urged banks to preemptively act to keep household debts in check, the FSC said.

Eun's remarks came as the Bank of Korea (BOK) has hinted that it could conduct its first post-pandemic rate hike later this year as the nation's economic recovery has been faster than expected.

South Korea's household credit grew at a slower pace in the first quarter, as banks tightened rules on loans.

Household credit reached a record high of 1,765 trillion won (US$1.56 trillion) as of March, up 37.6 trillion won from three months earlier.

The first-quarter tally compared with a 45.5 trillion-won on-quarter rise in the fourth quarter of last year.

Household debt has been one of the downside risks facing the economy, with such debt already reaching nearly 100 percent of the nation's gross domestic product.

Last week, Koh Seung-beom, a member of the BOK's rate-setting board, was nominated to lead the FSC.

Koh spearheaded the government's efforts to tackle a credit card bubble in 2003 and saving banks' soured project financing lending in 2011.

Banks urged to set up tighter supervision of household debts - 1


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