Strict lending rules force households to turn to savings banks

Strict lending rules force households to turn to savings banks

Korean households took more loans from savings banks last year compared with the previous year as banks tightened their lending rules to stay financially healthy, the central bank said Monday.

As of the end of 2015, outstanding household loans extended by savings banks stood at 13.69 trillion won ($11.9 billion), accounting for 1.2 percent of overall household loans worth 1,141.83 trillion won, according to the data compiled by the Bank of Korea.

he ratio of 1.2 percent marks the highest since 2006, when it was 1.33 percent, according to the data.

“Banks began to apply stricter rules when extending loans late last year to reduce risky assets. But savings banks opted to increase loans to households,” a BOK official said.

Savings banks have sharply increased their higher rate-carrying loans to low-graded households, which cannot take out loans from banks, with their loans to households accounting for a record 38.48 percent of the total last year, up from 12.59 percent in 2010, the data showed.

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