By Nam Hyun-woo
The self-employed who seek to open chicken places, cafes or other mom-and-pop shops in areas already full with such shops will face stricter regulations in getting loans, according to the government, Sunday.
The Financial Services Commission (FSC) released measures to rein in the country's snowballing household debt. In the measures, the FSC plans to establish a credit review model only for the self-employed among banks.
The model will contain tougher requirements for those who seek to open shops in areas already saturated with similar ships. So far, banks were not taking into account such details when they were extending loans for the self-employed.
The government believes such an "indiscrete" lending practice has led more of the self-employed to go bankrupt, which also raises the household debt.
From 2009 to 2013, more than 770,000 new businesses were established, but 650,000 of them shut down.
Though loans to the self-employed are managed separately from household debt, the government recognizes that such loans have strong relations with household debt because the financially troubled self-employed oftentimes resort to loans for their living.
"By applying tougher regulations on lending to the self-employed, the government will try its utmost to make loans to the self-employed less of a risk factor to the country's economy," an FSC official said.
At the end of third quarter last year, the total amount of loans to the self-employed stood at 464.4 trillion won. The country's household debt is hovering around 1,300 trillion won.
The self-employed who seek to open chicken places, cafes or other mom-and-pop shops in areas already full with such shops will face stricter regulations in getting loans, according to the government, Sunday.
The Financial Services Commission (FSC) released measures to rein in the country's snowballing household debt. In the measures, the FSC plans to establish a credit review model only for the self-employed among banks.
The model will contain tougher requirements for those who seek to open shops in areas already saturated with similar ships. So far, banks were not taking into account such details when they were extending loans for the self-employed.
The government believes such an "indiscrete" lending practice has led more of the self-employed to go bankrupt, which also raises the household debt.
From 2009 to 2013, more than 770,000 new businesses were established, but 650,000 of them shut down.
Though loans to the self-employed are managed separately from household debt, the government recognizes that such loans have strong relations with household debt because the financially troubled self-employed oftentimes resort to loans for their living.
"By applying tougher regulations on lending to the self-employed, the government will try its utmost to make loans to the self-employed less of a risk factor to the country's economy," an FSC official said.
At the end of third quarter last year, the total amount of loans to the self-employed stood at 464.4 trillion won. The country's household debt is hovering around 1,300 trillion won.
