The financial authorities are tightening regulations on real estate-related loans from credit and capital companies. New limits of 30% will be established for loans in the real estate and construction sectors, while the combined limit for related loans, including real estate project financing (PF), will be capped at 50%.
The Financial Services Commission announced on October 23 that it will propose amendments to the 'Supervision Regulations for Specialized Credit Finance Businesses' to implement these changes.
Currently, specialized credit finance companies must maintain real estate PF loans and guarantees within 30% of their credit assets, but there are no separate limits for loans by industry. To address this, the new regulations will set individual loan limits for the real estate and construction sectors at 30% of credit assets, with a combined limit of 50% for related loans, including real estate PF.
Additionally, the management obligations for electronic payment service providers (PG) by credit card companies will be strengthened. Credit card companies will be required to evaluate the financial status, settlement fund management, and history of illegal transactions of PG companies when entering or renewing contracts, as well as quarterly during the contract period. They will also be mandated to take necessary actions, including contract termination, based on the evaluation results.
The average daily credit card usage through electronic payment services increased from 744.5 billion won in 2021 to 1.166 trillion won last year.
Conversely, regulations on the rental industry will be eased. The total handling limit for rental assets will be expanded to include both lease assets and installment financing assets, while the limit per item will be abolished. However, to protect small and medium-sized businesses, entry into the short-term rental market will remain prohibited.
The Financial Services Commission plans to conduct the regulatory proposal until December 2 and aims to complete the amendments by the first quarter of next year.
* This article has been translated by AI.
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