South Korea Tightens Online Stock-Backed Loans, Cap Raised to 1 Billion Won Per Borrower

According to Odaily, as the South Korean stock market continues to rise, the rapid expansion of stock-backed loan services by online investment-linked financial companies has prompted financial regulators to step up controls, including setting an upper limit of 1 billion won on stock-backed loans per single borrower. Data released by the Financial Services Commission and the Financial Supervisory Service on August 15 shows that as of the end of June, the balance of stock-backed loans in the online investment finance industry stood at 898.3 billion won, an increase of 374.5 billion won from the first half of the year. Compared to 351.3 billion won at the end of last year, this represents a surge of 71.5% within six months.

In response, the Financial Supervisory Service will issue management targets to online investment finance companies, requiring that the monthly increase in new stock-backed loans not exceed 30% of the previous month's increase in related new loans. This new management measure will take effect immediately from August 16. Furthermore, to prevent risks from accumulating due to online investment finance companies overly concentrating on stock-backed loan business, regulators stipulate that, in principle, the limit on stock-backed loans for a single borrower must not exceed 1 billion won. However, exemptions may be granted if companies can keep their month-end stock-backed loan balances from July onwards at or below the level seen at the end of June. (Jin Shi)