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| Financial Supervisory Service Governor Lee Bok-hyun, right, speaks during a meeting with leaders of commercial banks here in Seoul, Jan. 18. Yonhap |
By Lee Min-hyung
Local commercial lenders are launching a series of financial support programs for households and vulnerable social groups amid escalating pressure from watchdogs.
KB Kookmin Bank was the first to operate its own household support program, in a preemptive move to ease households' growing financial burden. The lender will cut the interest rate for loans that are overdue by 1 percentage point for those who sign up for its household loan products. This cut will come into effect sometime in February after KB finishes updating its computing system, it said.
The bank will also stop charging early repayment charges for its household loans from Feb. 10.
Woori Bank also joined the move by slashing its variable interest rate by 0.4 percentage point on its mortgage products from Jan. 20.
"The decision came as part of our efforts to give practical support to consumers suffering from financial difficulties," an official from the lender said.
Last week, NongHyup Bank also launched a financial support program worth 12.6 trillion won for those in the provinces. The bank expanded prime rate benefits for the agricultural population to 0.5 percent from 0.3 percent. The prime rate for small business owners and the self-employed in the agricultural food industry has also been expanded to 0.3 percent from 0.1 percent.
It also decided to expand prime rate benefits for young people planning to take out rent loans from 0.3 percent to 0.5 percent. The variable rate for their mortgage loans will also drop by 0.8 percentage point, according to NongHyup Bank.
The lender will also provide a fund worth 70 billion won to a regional credit guarantee foundation, with the view to relieving the financial burden of small- and medium-sized enterprises. It will waive commission fees for customers transferring money via its mobile and online banking platforms.
The latest decisions by commercial lenders here came in response to financial authorities' repeated requests for them to help those in need during this period of financial volatility sparked by a steep set of benchmark rate hikes in 2022.
Financial Supervisory Service Governor Lee Bok-hyun recently urged leaders of major banks to support households carefully, so that they do not face any insolvency risks.
"Banks offer services for the whole country," Lee said. "If they can spend a third of their revenue on shareholder returns and a third of it on bonuses, then they can use the rest for the public and customers. Banks need to support more carefully the public who are suffering from financial difficulties due to steep rate hikes."
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