"Stop Debt-Fueled Investing" Internet Banks Raise Lending Bar... KakaoBank Cuts Overdraft Limit

[The Financial News] The three internet banks are moving to tighten lending in order to curb demand for debt-fueled investing. KakaoBank is cutting overdraft limits, while K Bank is suspending new overdraft account openings, in response to the financial authorities' emergency stance on household debt management.
According to the financial sector on the 16th, KakaoBank will reduce the maximum limit for overdraft loans to 100 million won starting on the 22nd. The previous maximum limit was 240 million won, meaning the cap has been lowered by about 140 million won.
From July, when renewing overdraft loans of 50 million won or less, the bank will cut the limit by up to 20% for accounts whose limit utilization rate has stayed below 20% over the past six months.
KakaoBank manages credit loans based on its internal daily application volume standards. If applications exceed the limit, it restricts credit lending. Loans for borrowers with mid- to low-credit scores are excluded. KakaoBank said, "We have already been operating with daily application limits for credit loans to ensure stable household debt management, and we plan to keep that system in place." It added, "We will maintain a strict stance on household debt management while working to provide funds centered on actual end users."
K Bank has suspended applications for new overdraft accounts from today through the end of July, making it the fastest of the three internet banks to move on household debt management. The bank also plans to reduce credit loan limits for high-income earners in the future. A K Bank official said, "The specific timing for applying the reduced limits on new credit loans is still under internal discussion."
Toss Bank will cap its maximum credit loan limit at 100 million won and lower its overdraft limit to 50 million won. The implementation date has not yet been decided.
The three internet banks also plan to adjust the pace of loan issuance in line with the financial authorities' household debt management stance and the preemptive response of major commercial banks. The financial authorities are stepping up their response to the sharp rise in other loans, including credit loans.
Household loans across the financial sector rose by 9.3 trillion won last month, a sharp increase from the previous month's gain of 3.5 trillion won. Other loans increased by 5.3 trillion won, led by credit loans of 3.4 trillion won, driving the overall rise in household lending.
chord@fnnews.com Lee Hyun-jung Reporter