South Korea: lending & credit regulation

Who regulates

• Financial Services Commission (FSC)

  Primary policy-making and regulatory authority for financial services, including lending and credit.

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• Financial Supervisory Service (FSS)

  Supervisory authority that enforces regulations and conducts inspections on financial institutions.

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Core laws & rules

• Personal Credit Management and Debtor Protection Act (2024)

  Takes effect October 17, 2024, establishing a legal framework to balance the rights of financial companies and individual debtors, allowing institutions to provide direct credit management services.

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• Specialized Credit Finance Business Act (2024 (Revised))

  Governs specialized credit finance businesses (e.g., credit card companies), including rules on business credit data usage and interest rate caps.

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• Act on Registration of Credit Business and Protection of Finance Users (2017 (Amended))

  Regulates moneylenders and specialized credit finance companies, including lowering the statutory interest rate cap to 24% annually.

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• Microfinance Support Act (2024 (Revised))

  Revisions approved to secure stable funding for policy-based microloans by increasing mandatory contribution rates for banks and insurance companies.

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Licensing & registration

• Banking and Non-Banking Lending

  All financial institutions, including banks and non-banks, must operate under licenses issued by the FSC/FSS and adhere to strict prudential standards, including DSR rules.

• Specialized Credit Finance Business

  Credit card companies and other specialized credit finance businesses require specific licensing and are subject to enhanced prudential standards, including loan loss provisioning and interest rate caps.

Restrictions & warnings

• Stressed Debt Service Ratio (DSR) rules are strictly enforced, with a third-stage rule applying a 1.50% additional stress rate from July 1, 2025. Mortgage limits in the Seoul metropolitan area are capped at KRW600 million.

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• The statutory interest rate cap for moneylenders and specialized credit finance companies is set at 24% annually.

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• Financial institutions are mandated to implement self-regulating household debt management systems based on borrower repayment capabilities.

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Direction of travel

• Regulators are focused on curbing rising household debt, particularly in the Seoul metropolitan area, through stricter debt management measures and DSR rules. The FSC is also promoting financial stability and sustainable growth, with recent initiatives supporting AI development and e-commerce vendors.

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Sources

1. Household Loans, July 2025 · 2025-08-13
2. Credit Recovery Support for Delinquent Debtors Paying Off Overdue Debt · 2025-08-11
3. Household Loans, June 2025 · 2025-07-09
4. Household Loans, May 2025 · 2025-06-11
5. FSC Announces Plan to Implement Third-stage Stressed DSR Rule as Scheduled from July 1 · 2025-05-20
6. Household Loans, March 2025 · 2025-04-10
7. FSC Introduces Plans to Improve Competitiveness of Corporate Financing by Securities Businesses · 2025-04-09
8. Household Loans, February 2025 · 2025-03-12
9. Household Loans, January 2025 · 2025-02-12
10. Household Loans, December 2024 · 2025-01-15
11. FSC Chairman Calls for Market Stability and Policy Implementation · 2024-12-16
12. Household Loans, November 2024 · 2024-12-11
13. Revised Rules on Specialized Credit Finance Business to Allow Card Companies to Make Use of Business Credit Data · 2024-12-03
14. Household Loans, October 2024 · 2024-11-11
15. Personal Credit Management and Debtor Protection Act Takes Effect from October 17 · 2024-10-16
16. Household Loans, September 2024 · 2024-10-11
17. Revised Rules on Microfinance Support Expected to Increase Availability of Funds for Inclusive Finance · 2024-09-24
18. Household Loans, August 2024 · 2024-09-11
19. FSC Chairman Meets with Banking Sector on Financial Stability and Sustainable Growth · 2024-08-20
20. Household Loans, July 2024 · 2024-08-12
21. Financial Support Programs for Enterprises Affected by E-commerce Payment Delays · 2024-08-06
22. Authorities Announce Financial Support Measures for Enterprises Affected by E-commerce Payment Delays · 2024-07-29
23. Household Loans, June 2024 · 2024-07-10
24. FSC Plans KRW3.5 Trillion Policy Finance Support to Promote AI Development · 2024-07-04
25. FSC Announces Plans for Implementing Stressed Debt Service Ratio Rules in H2 2024 · 2024-06-25
26. Amendments Proposed to the Regulations on Supervision of Banking Business · 2018-06-04
27. Amendments Proposed to the Regulation on Interest Rates Charged by Financial Companies for Delinquent Borrowers · 2018-02-26
28. Amendment Proposed to Regulation on Supervision of the Korea Housing Finance Corporation · 2017-09-20
29. Amendment to the Enforcement Decree of the Act on Registration of Credit Business and Protection of Finance Users · 2017-08-11
30. Amendments Proposed to Regulations on Supervision of Banking, Insurance, Mutual Financial, Mutual Savings Bank, and Specialized Credit Finance Businesses · 2017-08-11
31. Enhanced Prudential Standards Proposed for Specialized Credit Finance Companies · 2017-04-25
32. Proposed Amendments to Lower Credit Card Merchant Fees · 2015-12-13
33. FSC Chairman Emphasizes Comprehensive Debt Risk Management · 2024-08-05