Financial Services Commission’s non-face-to-face’Inclusive Finance Meeting’ Do Gyu-sang, Vice Chairman of the Financial Services Commission, presided over the’Inclusive Finance Meeting’ video conference at the Seoul Government Complex on the 29th. On this day, the savings bank, card, and loan industries requested policy support to expand loans for low-credit people. Provided by the Financial Services Commission
The government is pushing for revision of the law so that illegal private financing business operators cannot receive interest exceeding 6% per year. In this case, interest payments exceeding 6% per year will be used for repayment of the principal, and the remaining amount can be returned through a lawsuit for the return of unfair profit.
At a state council meeting on the 29th, the government decided on a bill to amend the loan business law. This bill is a follow-up to the’Measures to Eradicate Unlawful Finance’ announced in June, and the law must be changed in the National Assembly before it can be implemented. The Financial Services Commission is scheduled to submit a revised bill to the National Assembly in the near future. Any money loaned by a lender that has not been registered is illegal private finance.
“We do not recognize the legal maximum interest rate for illegal bonds”
The amendment changed the name of’unregistered lender’ to’illegal financier’ and lowered the limit of interest rates that illegal private financing companies can receive from the current 24% per annum to 6% per annum. Even though the business itself was illegal, they were able to earn interest up to the legal maximum interest rate (24% per year) like a legal lender. If the law is changed, interest paid in excess of 6% per annum to illegal private financiers becomes invalid.
6% per year is the commercial legal interest rate (statutory interest rate for commercial debt) prescribed in the Commercial Act. An official from the Financial Services Commission explained, “There were opinions that illegal finance should receive no less than a penny of interest, but in consideration of the principle of prohibiting excessive excess in the legal system, we have recognized the legal interest rate as well.” Even if you used illegal bonds, you do not have to pay back the interest exceeding 6% per year, and you can get them back even if you have already paid them. When filing a return lawsuit, you can get help from a lawyer through the government. Since this year, the Legal Aid Corporation has been operating the’free support project for debtor agents and litigation attorneys’.
Loans without documents are also invalid
It also restricts the ways of doing business that illegal lenders have been abusing to hold debtors. ‘Delinquent interest increase reloan’, which lends the principal plus overdue interest, and’no data loan’ without a contract, also decided not to recognize the legal effect.
The punishment for illegal private finance becomes even heavier. Loan advertisements that pretend to be government and financial companies are currently only penalized under 50 million won, but if the law changes, they will face up to three years in prison or a fine of up to 50 million won. Unregistered business is imprisoned for up to 5 years or a fine of 100 million won or less, and for violations of the highest interest rate, the level of sanctions is raised with imprisonment for up to 3 years or a fine of 50 million won or less.
2Financial and loan industry support measures come out
The Financial Services Commission emphasized that it will focus on preventing the’balloon effect’ from growing illegal private finance due to the statutory maximum interest rate cut (24→20% per year) scheduled for the second half of next year. In the first half of next year, it was decided to introduce a support plan for the 2nd financial sector and the loan industry, which are frequently used by low creditors.
Vice Chairman of the Financial Services Commission, Do Gyu-sang, at the’Inclusive Finance Meeting’ attended by officials from the financial sector, authorities, and consumer organizations, said, “We will seek multi-faceted support measures to maximize positive effects such as reducing the interest burden and minimize side effects such as shrinking financial use in institutional sectors.” Said.
At a meeting, the Loan Finance Association requested that “in order to minimize the rejection of loans by low creditors, the financing regulations of the loan business should be relaxed.” Due to the implicit guidance of the financial authorities, the loan industry has not been able to obtain money from the 1st financial sector, and has mainly raised funds from savings banks and capitals.
Reporter Lim Hyun-woo [email protected]