Loans from private money lenders shrink sharply in 2023

SEOUL: Loans extended by private money lenders in South Korea dropped sharply from a year earlier in 2023, while the number of people borrowing from private lenders also dropped significantly, data showed Friday. As of end-2023, outstanding loans from private money lenders stood at 12.5 trillion won (US$9.02 billion), down 3.37 trillion won, or 21.2 percent, from 15.87 trillion won tallied a year earlier, according to the data from the Financial Supervisory Service (FSS). The number of people who borrowed money from private lenders plunged over 26 percent to some 728,000 from about 989,000 over the cited period. The sharp declines in the number of users and outstanding loans, however, were largely attributed to the shutdown of a major private lender in October 2023, which led to the transfer of the lender's assets, including its outstanding loans totaling some 2 trillion won, to other financial institutions, including a savings bank. The average amount of money owed by each user came to 17.19 million won as of end-2023, up from 16.04 million won a year earlier, according to the FSS. The government "will closely monitor any illegal practices by private lenders that infringe on the people's daily lives and wealth, and sternly punish any legal violations to prevent damage from illegal private financing that often targets people with low credit ratings who may need emergency funds to resolve their financial difficulties," it said in a press release. Meanwhile, the financial regulator said the number of registered private money lenders came to 8,771 at end-2023, down from 8,818 a year earlier and 8,771 tallied six months before. Source: Yonhap News Agency