As a result of Lee Jae-myung's government pledges, it is expected that if various contributions and other legal costs are excluded from the household and small business loan additional charges of banks, the interest rate will fall by about 0.2 percentage points.
According to the financial sector and others on the 8th, President Lee Jae-myung said he would ease the repayment burden by amending the Banking Act to ensure that the legal costs, such as various contributions, are not unjustly passed on to financial consumers in his campaign pledges regarding the relief and revitalization of household and small business burdens during his presidential candidacy.
Bank loan interest rates are calculated by adding the 'additional charge' that banks arbitrarily attach to the 'benchmark interest rate', which reflects market and funding rates such as bank bond rates and the Cost of Funds Index (COFIX), and then subtracting the 'preferred interest rate (adjusted interest rate)' adjusted by the bank headquarters or branch managers.
The legal expenses included in the calculation of additional charges are education tax, reserves, deposit protection fees, and legal contributions. As model standards for improving the rationality of loan rate systems are introduced, commercial banks have excluded deposit insurance fees and reserve costs from this.
Accordingly, it is observed by financial authorities and the financial sector that combining the education tax of 0.03% and the legal contribution ratios of different contributions such as those from the Korea Financial Services Agency and the Housing Finance Credit Guarantee Fund results in an average reduction effect of 0.15 to 0.2 percentage points.
Eleven lawmakers, including Min Byeong-deok from the Democratic Party of Korea, specified in the Banking Act amendment proposed on December 30 last year that items that cannot be reflected in loan interest rates include reserves, insurance premiums according to the Deposit Protection Act, and contributions to institutions such as the Korea Financial Services Agency, Korea Technology Finance Corporation, the Agricultural and Fishery Credit Guarantee Fund, Credit Guarantee Fund, regional credit guarantee foundations, the Credit Guarantee Fund Central Association, and the Housing Finance Credit Guarantee Fund.
The bill also includes provisions to punish bank employees who reflect these items in loan interest rates with up to one year of imprisonment or fines of up to 30 million won. This bill was designated for expedited processing on April 17 and could take up to 330 days (180 days for the standing committee, 90 days for the Legislation and Judiciary Committee, and 60 days for submission to the plenary session) until it is brought before the full assembly.