Gov't to tighten oversight of banks over household debts

South Korea's chief financial regulator said Monday that it needs to turn the screws on local banks and other lenders extending mortgage loans at a rapid pace, as the government is struggling to curb household debts.

"The government will take strong, specific follow-up measures" to the Aug. 25 announcement aimed at slowing the growth in the amount of household debts, Yim Jong-yong, chairman of the Financial Services Commission (FSC), told reporters.

His remarks came amid public criticism that the latest package of measures against the problem, revolving around controlling the supply of new apartments, is pointless and futile.

Household credit here jumped 11.1 percent on-year to an all-time high of 1,257.3 trillion won ($1,130 billion) in the second quarter of 2016, boosted by prolonged low interest rates and unrelenting demand for new apartments, according to official data.

There is no indication of a fall in borrowing, and many expect household credit to exceed 1,300 trillion won by the end of this year.

It's one of the biggest problems facing Asia's fourth-largest economy already in trouble over lackluster export growth and domestic spending.

Yim said the authorities will closely monitor the related risk management of financial services companies here.

"The Financial Supervisory Service will carry out a special audit of financial firms of which mortgage loan growth is excessively speedy," he said, adding it's intended for their risk and financial soundness management. (Yonhap)