Korean card companies are shifting toward loans for sole proprietors and small businesses as regulators tighten rules on household debt. The move follows summons by the Financial Supervisory Service this week after several issuers exceeded targets for card loan balances. Industry officials cite regulatory pressure and limited growth options in consumer lending as key drivers.
As Korea’s financial authorities continue tightening their grip on household debt, card issuers are looking beyond personal card loans for growth, with many expanding into lending for sole proprietors and small-business owners, according to industry officials Thursday.
In recent years, card companies have relied on card loans to offset slowing growth in their transaction fee incomes. Pressure on the sector intensified this week after several major card issuers exceeded regulatory targets for outstanding card loan balances. The Financial Supervisory Service summoned the companies on Monday and urged them to strengthen internal risk controls.
Samsung Card recently joined Shinhan, KB Kookmin, Hyundai, Woori and BC Card in offering these products, while Hana Card and Lotte Card are reviewing potential market entries. KB Kookmin Card, for example, temporarily removed its consumer loan products from major loan comparison platforms to limit inflows of new customers.
“Loans to sole proprietors fall within the scope of both inclusive and productive finance, so expanding this business is viewed positively from the government’s perspective as well,” an official at a card company active in the market said.
