Politicians call on banks to ease borrowers' interest burden

Rep. Kweon Seong-dong, center, floor leader of the ruling People Power Party (PPP), joins the party's supreme council meeting in Yeouido, Seoul, Thursday. He asked commercial banks to share the burden that borrowers are suffering under massive inflation while lenders profit from growing interest income. Yonhap

By Yi Whan-woo

Commercial banks are facing calls to lower lending rates as part of efforts to ease the burden placed on low-income borrowers, amid soaring inflation and a spike in the benchmark interest rate.

Some in political circles joined in criticism recently against lenders that profit "excessively" from interest income, while borrowers are struggling to make repayments due to higher interest rates.

"The banks should play a part in sharing pains at a level that does not breach their rights in the market," Rep. Kweon Seong-dong, floor leader of the ruling People Power Party (PPP), said during the party's supreme council meeting this week.

He noted public criticism of banks is growing for abusing the difference between deposit and lending rates to reap huge profits.

Also attending the meeting, PPP chief policymaker Rep. Sung Il-jong voiced a similar view.

"The people's livelihoods hang by a thread but the banks are enjoying tremendous profits from interest margins," he said. "The banking industry should avoid its overall sales efforts being disparaged as playing with interest."

The PPP lawmakers' views are in line with those of President Yoon Suk-yeol and Financial Supervisory Service Governor Lee Bok-hyun.

During a meeting with top presidential aides this week, Yoon called on financial authorities and banking firms to "work together to lessen the burden concerning interest rates for consumers."

In a separate meeting with CEOs of major banks, Lee asked them to "come up with measures to ease the pace of the rate increase."

The Bank of Korea ended its near-zero interest rate policy last August, and has since delivered five rate hikes, including three in 2022.

In 2021, the combined net profit of 20 commercial banks came to 16.9 trillion won ($13 billion), up 39.4 percent from 12.1 trillion won tallied a year earlier.

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