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Regulator to step up oversight of credit unions

2018/06/13 12:00

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SEOUL, June 13 (Yonhap) -- The financial watchdog said Wednesday it will step up oversight of credit unions' financial health after their sales of personal loans surged.

In the first four months of this year, outstanding personal loans extended by credit unions rose 10.9 percent to 49 trillion won, compared with a 0.2 percent gain in household loans, according to data by the Financial Supervisory Service (FSS).

From next Monday, FSS officials will visit main offices of credit unions and inspect their business practices, particularly for personal loans.

Credit unions will adopt tougher guidelines for mortgage loans from July 23 in line with the government's latest push to curb household debt.

The stricter lending calculation for home mortgages, named the Debt Service Ratio (DSR) by the financial authorities, uses a new system that measures all debt principal and interest payments as a proportion of annual income.

Financial authorities said the DSR system, which was adopted at commercial banks in March, better assesses a borrower's repayment ability and reduces the risk of default.

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