As household loan volumes hit record highs, the Financial Supervisory Service (FSS) plans to inspect banks' household loan management practices starting from the 15th.
This inspection will focus on whether banks have appropriately established and implemented their annual management plans related to household loans, whether loan performance is reflected in branch key performance indicators (KPIs), and whether loans were issued circumventing the Debt Service Ratio (DSR) regulations.
According to the financial sector on the 12th, household loans have increased by about 14 trillion won over the past three months, mainly due to policy loans and the recovery of the housing market leading to an increase in mortgage loans.
In February and March of this year, household loans decreased by 1.9 trillion won and 4.9 trillion won respectively, but showed an increasing trend from April to June.
In this on-site inspection, the FSS will investigate whether banks have indiscriminately issued loans exceeding their annual management plans, and whether management plans were revised without board approval.
Additionally, the inspection will include checking for tricks such as encouraging the conversion of credit loans to mortgage loans for living stabilization funds to expand the DSR limit.
This is because there have been cases of abuse of mortgage loans for living stabilization funds, which can increase the DSR limit by up to 2.2 times.
Moreover, the inspection will cover compliance with the stress DSR introduced in February this year, and adherence to administrative guidelines that prevent reflecting household loan performance in KPIs.
The FSS will also investigate any misuse of the high DSR loan regulation exemptions granted to specialized banks.
In particular, the FSS plans to check whether policy mortgage loans like Didimdol and Bogeumjari have been appropriately supplied to housing-vulnerable groups.
Banks found to have inadequate household loan management through this inspection will face stringent measures.
An FSS official stated, "Banks that do not comply with household loan guidelines will be sanctioned according to supervisory regulations."
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FSS to Inspect Banks' Household Loan Management Practices... Focus on Circumvention of DSR Regulations
As household loan volumes hit record highs, the Financial Supervisory Service (FSS) plans to inspect banks' household loan management practices starting from t
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