Finance minister considers tightening overdraft rules

Korea is considering tightening rules on overdrafts as a sharp rise in lending adds to concerns over the country's already high household debt, the finance minister said Monday.

As the financial regulator toughened rules on mortgage lending to curb rising housing prices, people heavily took out overdrafts in recent months to meet demand for property-related costs and invest in stocks amid low interest rates.

At a parliamentary session, Finance Minister Hong Nam-ki said the government is considering taking measures to cope with a sustained rise in credit loans.

"The government is closely watching the household debt problem and is trying to actively respond to it," Hong said at the parliamentary meeting on the budget review.

Banks' non-mortgage loans amounted to 254.3 trillion won ($227.9 billion) as of end-October, up 3 trillion won from the previous month, according to central bank data. Unsecured loans accounted for the bulk of banks' non-mortgage lending.

Korea's household credit reached a record high of 1,637.3 trillion won as of the end of June, up 25.9 trillion won from three months earlier.

The county's growing household debt is repeatedly cited as the main drag on Asia's fourth-largest economy, as households' high indebtedness is feared to curb domestic demand and thus crimp economic growth.

The government has unveiled a series of measures to put a lid on rising housing prices, but the country's home prices have not shown a letup.

Yonhap