K Bank will not reopen overdraft accounts in September, extending suspension by one month

[Financial News] K Bank will extend its suspension of new overdraft account openings by one month, until the end of September. Although the financial authorities have expanded banks' lending capacity for household loans, internet-only banks appear to be moving cautiously on easing restrictions on credit loans as they are being asked to focus on funding real demand. According to the financial sector on the 27th, K Bank decided to extend the suspension period for new overdraft account openings from the end of August to Sept. 30. Since suspending new openings on June 16 to manage the growth of household lending, K Bank has extended the measure by one month at a time.
Keeping a specific financial product suspended for more than three months is also a burden for K Bank. It limits customer choice and could drive customers to other banks or weaken the product's competitiveness.
A K Bank official explained, "We are continuously monitoring market conditions and household lending trends, and we will review whether adjustments are needed in the future."
In June, as a booming domestic stock market increased demand for debt-fueled investing, the financial authorities asked banks to manage credit loans more closely. In response, K Bank suspended new overdraft account offerings, while KakaoBank Corp and Toss Bank also reduced their credit loan and overdraft account limits.
Recently, the financial authorities raised banks' annual household loan growth target from 1.5% to 3.0%, expanding room for new lending. However, the measure was designed to keep housing-related loans, such as moving-expense loans, interim payment loans and final payment loans, separate from the overall cap so that funding for real demand could flow more smoothly.
Internet-only banks are cautious about immediately allocating the increased overall capacity to credit loans and overdraft accounts. Credit loans are difficult to verify in terms of how the funds will be used, and they can also turn into investment demand depending on stock market conditions. KakaoBank Corp and Toss Bank have also kept the reduced credit loan and overdraft account limits introduced in June.
Banks are currently easing mortgage loan regulations first. iM Bank will resume new issuance of mortgage credit insurance and mortgage credit guarantees for face-to-face mortgage loans starting on the 1st of next month. Earlier, Nonghyup Bank resumed variable-rate mortgage lending and also decided to lift restrictions related to loans for refinancing from other banks and mortgage credit guarantees. MCI and MCG are guarantee-type insurance products that are purchased together when a mortgage loan is executed. If insurance coverage is restricted, borrowers can only receive a loan amount excluding the small tenant deposit, effectively reducing the mortgage loan limit.
A banking industry official said, "Since credit loans can lead to investment demand, banks are likely to watch market conditions and the pace of loan growth before deciding whether to ease restrictions."
[email protected] Lee Hyun-jung Reporter