Sanwa Money not allowed to issue loans for six monthsSanwa Money, the nation’s second-largest private money lender, has been banned from extending fresh loans and generating new business for six months from today after it lost a lawsuit in relation to excessive interest rates.
The Seoul Administrative Court dismissed the company’s request yesterday that sought to revoke an order handed down by the Gangnam District Office in late February to suspend its business. The court ruled that the loan provider violated the law by continuing to charge the exorbitant rates for a short period after the cap was lowered.
“The maximum annual interest rate for loans was brought down to 44 percent from 49 percent [in early February], but the plaintiff still applied the higher rate [until the office got involved],” the court said.
Sanwa Money started operating in Korea in 2002 and currently loans 1.3 trillion won ($1.14 billion) to 450,000 customers in the country.
Industry sources said that A&P Financial, which is better known as Rush N Cash, will receive a similar punishment as the nation’s largest money lender awaits the result of its trial next month.
Another two major lenders, Won Cashing and Miz Sarang, are also expected to face court orders that confirm the district offices’ business suspension.