Banks to expand credit loans to individuals

Citizens will find it much easier to get loans, as banks are making requirements easier for unsecured credit loans.

Unsecured credit lending refers to the practice of banks, in which they lend money to customers according to their credit ratings, which are calculated based on their occupation, monthly income and assets without collateral. So far, a great deal of restrictions including stringent loan ceiling and qualification requirements have been imposed on individual borrowers based on their jobs and salaries.

Bank officials explained that they decided to expand credit loans to individual customers because loans to households are considered safer than loans to companies. However, according to some observers, the decision is connected to President Kim Dae-Jung`s recent statement calling on banks to expand credit loans.

Meanwhile, an official of the Korea Federation of Banks said that domestic banks` ratio of credit loans sharply increased from 42.3 percent in 1997 to 55.2 percent at the end of 2000. He warned that a reckless expansion of credit loans could lead to massive bank insolvency in the next several years later.

Lee Na-Yeon larosa@donga.com