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South Korea to implement new loan-to-deposit ratio rules in 2020

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South Korea to implement new loan-to-deposit ratio rules in 2020

South Korea's Financial Services Commission announced plans to implement new rules governing loan-to-deposit ratio at the country banks from Jan. 1, 2020, as they seek to encourage a shift in lending emphasis to businesses from households.

Under the new rules, the weighting assigned to household loans at commercial banks will be raised by 15%, while the weighting for corporate loans will be reduced by 15%. Internet-only banks will be exempted from complying with the rules until they begin to handle corporate loans.

South Korean regulators have been clamping down on an increase in household debt, which grew 14.1% in 2017. For instance, in April, the FSC announced plans to subject savings banks to new loan-to-deposit ratio rules in a phased manner beginning 2020.