South Korea Tightens Stock-Backed Loans, Capping Individual Borrowers at 1 Billion Won

According to Odaily, as the South Korean stock market continues to rise, the stock-backed loan business of online investment-linked financial companies has expanded rapidly, prompting financial regulators to step up controls, including setting an upper limit of 1 billion won for stock-backed loans to a single borrower. Data released by the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) on August 15 showed that as of the end of June, the balance of stock-backed loans in 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 to 351.3 billion won at the end of last year, it surged by 71.5% in six months.

In response, the FSS will issue management targets to online investment financial companies, requiring that the monthly increase in new stock-backed loans does not exceed 30% of the previous month's increase in related loans. This new management measure will take effect immediately on August 16. Additionally, to prevent risk accumulation from an over-concentration of stock-backed loan business by online investment financial companies, regulators stipulate that, in principle, the upper limit of stock-backed loans to a single borrower shall not exceed 1 billion won. However, companies may be exempted if they can keep the month-end stock-backed loan balance from July onwards within the level at the end of June. (Jin Shi)