Financial regulator to seek law revision for tougher punishment against illegal private money lenders

All News 10:00 November 13, 2024

SEOUL, Nov. 13 (Yonhap) -- South Korea's financial regulator said Wednesday that it will double efforts to revise laws on private money lenders to levy tougher punishments against any illegal acts.

The Financial Services Commission said it will submit a revision to the law this year under which those that violate the 20 percent annual interest rate limit on their loans may face a maximum prison term of five years from the current three years or a maximum fine of 200 million won (US$142,000) from the current 30 million won.

The maximum penalty for unregistered or illegal money lending businesses will also be raised from a five-year prison sentence or a 50 million-won fine to five years in prison or a 200 million-won fine, according to the FSC.

The measures came after President Yoon Suk Yeol called on authorities earlier this week to intensify efforts to combat illegal money lenders and come up with financial support to prevent ordinary people from falling prey to loan sharks.

Loans extended by private money lenders dropped sharply last year and the number of people borrowing from private lenders also dropped significantly.

But illegal private money loan-related practices continued infringing on ordinary people's daily lives and wealth.

As of end-2023, outstanding loans from private money lenders stood at 12.5 trillion won, down 3.37 trillion won, or 21.2 percent, from 15.87 trillion won tallied a year earlier, according to data from the Financial Supervisory Service (FSS).

The number of people who borrowed money from private lenders plunged over 26 percent to some 728,000 from about 989,000 over the cited period.

Meanwhile, the financial regulator said the number of registered private money lenders came to 8,771 at end-2023, down from 8,818 a year earlier.