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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] South Korea’s community credit unions, known as Saemaul Geumgo, recorded nearly KRW 130 billion (about USD 95 million) in irregular loans last year that violated single-borrower lending limits, prompting authorities to strengthen supervision.
According to data submitted to a parliamentary committee by financial authorities and the Ministry of the Interior and Safety, 31 cases of loans exceeding single-borrower limits were identified nationwide in 2024, with excess lending totaling KRW 125.9 billion. The largest amounts were found in the Gwangju–South Jeolla region, followed by Daegu, Gyeonggi, Ulsan–South Gyeongsang and North Gyeongsang.
The scale of such violations has risen sharply in recent years. Annual excess lending stood below KRW 200 billion between 2020 and 2022 but surged to more than KRW 1.4 trillion in 2023 and over KRW 4 trillion in 2024, before easing last year to around KRW 1 trillion—still well above earlier levels.
Authorities attribute the increase partly to rapid growth in corporate lending by Saemaul Geumgo branches and improved internal inspection systems that have raised detection rates. Under current rules, loans to a single borrower are capped at the higher of 20% of a credit union’s equity or 1% of total assets, with an absolute ceiling of KRW 10 billion. Violations typically involve the use of multiple related parties or nominee borrowers to bypass limits.
The government said it will intensify monitoring of improper lending during a joint inspection program running through June, focusing on loan screening processes, internal controls and fund flows among borrowers deemed likely to fall under the same borrower category, such as family members, business partners and related companies.
Officials said the measures aim to curb financial misconduct and prevent large-scale incidents that could undermine confidence in the community credit union system.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
