‘Delay in Revealing’ By Government Causes Criticism

Default of credit by Individuals surpassed 250 million people, recording the highest number. It is expected that the number will increase next year as financial agencies can share information of loan above 1 won and bank, card firms are reinforcing management regarding potential defaulters.

On the other hand, it is reported that Ministry of Finance and Economy and Financial Supervisory Service, etc tried to hide such situation regarding credit default, causing criticism that government carried out ‘indirect support-the ruling party’ facing presidential election in December.

The Korea Federation of Banks stated on 29th that the number of defaults by individuals at the end of October is 2,528,945 (more than 3 month arrears) and it has increased 73,818 (3.01%) in comparison to September.

Registered cases of default are 8,688,992 and it means that one individual has had an arrear averaging 3.4 cases. This is higher than 2.72 cases in the end of last year and shows that personal financial situation has worsened.

Staff of A bank said, “Bank and credit card firms reduced personal credit limit by 80~100%, who received cash service from more than three cards and around 2 million people might be included” and “ individual credit defaults will highly increase from the beginning of next year. ”

Such data has been revealed every month, however, MOFE demanded KFB to ‘announce every quarter’ under excuse that ‘it can cause social uneasiness’. However, KFB rejected it saying that it can’t change announcement standard suddenly.

On the other hand, Financial Supervisory Service stated that average arrears rate (above one day arrears) of nine exclusive card firms at the end of October is 10.4%, a rise of 1.2% from 9.2% in September. Arrears rate of credit card firms has surpassed 10% for the first time such as, △ Foreign 14.9% △ Dongyang 14.7% △ LG 11.7% △ Woori 11.6% △Shinhan 11.4% △ Hyundai 11.1% △ Kookmin 10.6%.

Arrears rate above one month is also 7.7%, which is a rise of 1.1% from 6.6% as compared to the previous month and arrears rate of cash service has highly increased to 13.9%, a rise of 1.9%.

Dong-Won Kim Do-Young Kim daviskim@donga.com nirvana1@donga.com