Friday, May 2nd, 2014
SEOUL, KOREA - Banking consumers will no longer need to visit the bank in person when renewing credit lines and instead do it on the phone. Although this is applicable only to credit loans for individuals, the privilege may be extended to other types of loans in the near future. The Financial Services Commission said on May 1 that it would institute reforms simplifying banking practices in favor of consumers. For example, the consumer can give consent to the terms of the credit loan by saying yes or pressing a button to each prompt.
The financial watchdog plans to implement the new rules by the fourth quarter of this year after preparing new loan agreement forms and other ordinances before the third quarter.
In addition, the commission will mandate savings banks to give advance notices to corporate banking customers whose loan balance is in excess of a legally permitted limit. Currently savings banks are not allowed to provide loans (including guarantees) to borrowers more than 20 percent of their equity capital. Oftentimes, the equity capital volume changes due to a net loss, which automatically reduces the company's credit limit with the savings bank.
In this case, the company may fall into a serious financial situation if there was no notice well ahead of time. The commission will introduce a rule to make it mandatory for savings banks to give notices to corporate customers whose loan-to-equity capital ratio surpasses 15 percent.