Elderly people borrow more from savings banks, private lenders

Published : Mar 6, 2017 - 10:41 Updated : Mar 6, 2017 - 10:41

The elderly in South Korea are increasingly turning to savings banks or smaller private lenders despite relatively high interest rates, data showed Monday.

Outstanding loans extended by local savings banks to people aged 60 or older totaled 218.2 billion won ($188 million) at the end of last year, up 41.32 percent from a year earlier, according to Rep. Min Byung-doo of the Democratic Party.

A borrower at a South Korean savings bank. (Yonhap)

It marks almost a four-fold increase from 59 billion won in 2012.

The lawmaker cited a tally from the Financial Supervisory Service, the nation's financial watchdog.

Outstanding loans from private lenders also jumped 24.33 percent on-year to 293.8 billion won in 2016.

The trend reflects growing financial difficulties facing a growing number of elderly people here suffering falling income and low credit ratings.

Statics Korea said earlier the heads of local households in the age group earned a monthly average of 2.93 million won last year, down 2.3 percent from 3 million won in 2015.

It raises concern about a negative impact om the financial soundness of those savings banks and private lenders amid a prolonged economic slump and interest rate hikes.

The average rates of loans for those elderly people by savings banks and private lenders here reach 22.2 percent and 31.2 percent, respectively.

"Borrowing demand by old people is on the rise but financial services are insufficient for them, nudging them to use savings banks or private lenders," Min said, adding the government needs to address the problem. (Yonhap)