South Korean banks tighten credit loan limits as household debt surges

KB Kookmin Bank announced that from May 16 it will temporarily cap new general credit loans at 100 million won and minus‑account limits at 50 million won for new applicants. A bank spokesperson said the move replaces the previous income‑based limits and will stay in effect until further notice, while still maintaining separate criteria for low‑income and policy loans.

Shinhan Bank is also introducing tighter controls from May 15, limiting both face‑to‑face and non‑face‑to‑face credit loan applications and reducing minus‑account limits for loans exceeding 30 million won. The bank said it will cut unused credit limits by up to 20 percent for accounts with low usage, but will exclude vulnerable‑borrower products.

Both banks say the actions respond to a rapid rise in household borrowing, with total household loans growing by 9.3 trillion won in May, driven largely by credit and other non‑mortgage loans. The sector aims to curb debt expansion while preserving support for financially vulnerable households.