South Korea’s divisive parliament is in rare agreement that something has to be done to stop loan sharks from preying on a million desperate borrowers.
The global economic crisis has been a boon for private lending firms that operate outside the banking system. By law they can charge 49 percent interest per annum but many demand far more.
Members of parliament have proposed laws that would cut the interest rates private lenders can charge and push the criminal segment out of the sector.
Most money is lent by a few firms, operating within the law and advertising fast cash on TV.
But there are thousands of small lenders operating on the fringes of the law that target people desperate for money.
The latest worries come as household debt is rising in South Korea, hitting 661.51 trillion won (US$536.2 billion) at the end of June, equal to 65 percent of GDP.
“Households are spending more than they earn and their ability to pay off debt is weak. If interest rates rise and debt grows, this will pose problems for the economy,” said Jeong Young-sik at Samsung Economic Research Institute.
The amount owed to private lenders is relatively small, but lawmakers are worried about the wider social costs. Only about 5 percent of South Koreans use private lenders.
But the government financial regulator, the Financial Services Commission (FSC), said they account for about 85 percent of the country’s troubled debtors who are seriously behind in payments or on the brink of bankruptcy.
The typical loan made by the some 16,000 private lenders is for a few thousand dollars for household expenses or to start up a small business, the commission said.
The FSC launched its own crackdown in April and said it would start a 3 trillion won fund to provide low-interest loans for people who would typically borrow from private lenders.
It forced about 1,000 lenders out of business.
Laws before parliament would lower the ceiling for rates to about 30 percent for non-secured loans and increase fines and punishments for those caught violating the law.
Earlier this year, South Korean media was saturated with the story of a young women who borrowed about US$2,500 to pay college tuition and was slapped with illegal fees that put her interest rate at nearly 350 percent, forcing her to take out another loan.
The lender then forced the woman into prostitution to pay off her debt. Her father was dragged into the mess and also fell into debt. He ended up killing his daughter and committing suicide.
Shamans in Peru on Monday gathered for an annual New Year’s ritual where they made predictions for the year to come, including illness for US President Donald Trump and the downfall of Venezuelan President Nicolas Maduro. “The United States should prepare itself because Donald Trump will fall seriously ill,” Juan de Dios Garcia proclaimed as he gathered with other shamans on a beach in southern Lima, dressed in traditional Andean ponchos and headdresses, and sprinkling flowers on the sand. The shamans carried large posters of world leaders, over which they crossed swords and burned incense, some of which they stomped on. In this
Indonesia yesterday began enforcing its newly ratified penal code, replacing a Dutch-era criminal law that had governed the country for more than 80 years and marking a major shift in its legal landscape. Since proclaiming independence in 1945, the Southeast Asian country had continued to operate under a colonial framework widely criticized as outdated and misaligned with Indonesia’s social values. Efforts to revise the code stalled for decades as lawmakers debated how to balance human rights, religious norms and local traditions in the world’s most populous Muslim-majority nation. The 345-page Indonesian Penal Code, known as the KUHP, was passed in 2022. It
‘TRUMP’S LONG GAME’: Minnesota Governor Tim Walz said that while fraud was a serious issue, the US president was politicizing it to defund programs for Minnesotans US President Donald Trump’s administration on Tuesday said it was auditing immigration cases involving US citizens of Somalian origin to detect fraud that could lead to denaturalization, or revocation of citizenship, while also announcing a freeze of childcare funds to Minnesota and demanding an audit of some daycare centers. “Under US law, if an individual procures citizenship on a fraudulent basis, that is grounds for denaturalization,” US Department of Homeland Security Assistant Secretary Tricia McLaughlin said in a statement. Denaturalization cases are rare and can take years. About 11 cases were pursued per year between 1990 and 2017, the Immigrant Legal Resource
ANGER: US-based activists reported protests at 174 locations across the country, with at least 582 arrested and 15 killed, while Khamenei said the protesters were ‘paid’ Iran’s supreme leader on Saturday said that “rioters must be put in their place” after a week of protests that have shaken the Islamic Republic, likely giving security forces a green light to aggressively put down the demonstrations. The first comments by 86-year-old Ayatollah Ali Khamenei come as violence surrounding the demonstrations sparked by Iran’s ailing economy has killed at least 15 people, according to human rights activists. The protests show no sign of stopping and follow US President Donald Trump warning Iran on Friday that if Tehran “violently kills peaceful protesters,” the US “will come to their rescue.” While it remains
RSS