Korea tightens online stock loans, capping individual borrowers at 1 billion won

Odaily reported that with the recent continuous rise in South Korea's stock market, the stock loan business of online investment-linked financial companies has expanded rapidly, prompting financial regulators to step up controls, including setting the upper limit of stock loan amount for a single borrower at 1 billion won. Data released by the Financial Services Commission and the Financial Supervisory Service on August 15 showed that as of the end of June, the stock loan balance of the online investment-linked financial industry stood at 898.3 billion won, an increase of 374.5 billion won from the first half of the year. Compared with 351.3 billion won at the end of last year, it surged by 71.5% within half a year.

In response, the Financial Supervisory Service will issue management targets to online investment finance companies, requiring that the scale of new stock loans each month shall not exceed 30% of the scale of new linked loans in the previous month. This new management measure will take effect immediately from August 16. In addition, to prevent risk accumulation caused by online investment finance companies excessively concentrating on stock loan businesses, regulators stipulate that, in principle, the upper limit of stock loan amount for a single borrower shall not exceed 1 billion won. However, if a company can keep its month-end stock loan balance after July within the balance level at the end of June, it may be exempted. (Jin Shi)