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Gov`t may revive law on interest rate ceiling

Posted March. 23, 2001 18:17,   


The government is reviewing a plan to revive a law that would impose an interest rate ceiling. The law was abolished in January 1998.

An official of the Finance and Economy Ministry said Friday that the government is currently examining solutions to the problem of quasi-financial institutions and private money-lenders imposing exorbitantly high interest rates on borrowers in the middle- and low-income brackets. ``Based on the results of the study, the government will carefully consider the idea of reintroducing the interest rate ceiling,``the official said.

The measure came after President Kim Dae-Jung instructed the ministry Thursday to come up with measures to reduce hardships on citizens arising from the lifting of the ceiling. Enacted in 1962, the law bans annual interest rates higher than 40 percent. Under the law, loans with higher rates would be declared null and void and violators would be punished under fair trade, anti-trust and criminal laws.

The ministry has been lukewarm on reinstating the law, saying it does not conform to international norms and that people still had problems with loan sharks even when the law was in effect.

The government abandoned the law at the behest of the International Monetary Fund during the 1997-98 financial crisis.