FSC chief vows to fix banks' overly tight balance-payment loan rules

FSC Chairman Lee Eok-won said Wednesday that the government has not reversed its balance-payment loan policy, but is working to fix the parts where banks have tightened household lending beyond what is appropriate. "This is not a policy reversal," Lee said. "We are consulting with banks on the parts they have squeezed too hard and making sure things proceed in a reasonable way."

Lee made the remarks at a plenary session of the National Assembly's Political Affairs Committee, responding to People Power Party lawmaker Seo Il-jun, who questioned whether it was appropriate for a core regulatory target to be changed on the spot based on a petitioner's comments. "We have not changed the policy this way or that way," Lee said. "Balance-payment loans can still be obtained within the existing regulations."

Seo said that at a presidential real estate policy forum, a petitioner asked that group loans be excluded from the aggregate household debt cap, the president immediately directed the FSC to review the matter, and the FSC subsequently moved to exclude group loans from the cap. He then asked whether the aggregate cap was not a core pillar of the 2026 household debt management plan.

When Lee answered that it was, Seo said: "How poorly designed must the FSC's regulations have been if they were lifted the moment someone raised the issue with the president?"

Lee then defended the FSC's track record, saying that household debt as a share of GDP had fallen from 89.4 percent in 2024 to 88.1 percent at the end of last year and further to 85.3 percent in the first quarter of this year, adding that deleveraging had been proceeding properly.