Korea to Boost Household Debt Monitoring; Take Steps If Needed

South Korea’s financial regulator will boost monitoring of household debt growth and take additional steps if needed, the Financial Services Commission said today in a report to parliament.

The Financial Supervisory Service, a privately funded agency that enforces FSC policies, may increase monitoring of household debt growth stemming from non-bank lenders, it said in a separate parliamentary report today. The FSS may also raise its loan-loss provision guidance for the lenders, which include insurers and credit card companies, and tighten their asset-to- lending ratio, it said.

South Korea’s central bank has held its policy rate at 3.25 percent, the highest in more than three years, for seven straight months through January in an effort to curb household borrowing amid waning growth. The nation’s economy expanded at the slowest pace in two years in the final quarter of 2011 as exports and consumer consumption declined, the Bank of Korea said on Jan. 26.

The regulators aim to keep household growth in line with the expansion of South Korea’s real economy, the reports said.

To contact the reporter on this story: Seonjin Cha in Seoul at scha2@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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