The lender, controlled by Viva Republica, the operator of the Toss fintech app, will launch its banking services, including offering credit lending, savings and deposits, with a focus on expanding lending at medium interest rate.
Earlier in June, when the online bank received final approval from the Financial Services Commission to operate the business, the lender pledged to extend more than 30% of its credit loans to borrowers. having a low to moderate credit rating like young people and small business owners. by the end of the year.
The country’s first and second-largest online lenders – Kakao Bank and K bank, which were established in 2016 with the aim of offering medium-interest rate products, also announced that they will increase the proportion of rate products. average interest at 20.8%. and 21.5%, respectively.
Prior to launch, Toss Bank set its minimum interest rate on credit loans at 2.76% per annum, the lowest among commercial banks. The average interest rate charged on credit loans offered by large commercial banks has fluctuated between 3 and 4% in recent months.
A growing number of loan seekers are likely to flock to Toss Bank for now, as commercial banks have tightened rules on granting personal loans, under pressure from financial authorities seeking to curb the country’s household debt, according to industry sources.
Earlier this year, the regulator urged local banks to limit their annual loan growth to 5%. The annual loan growth target, however, does not apply to online-only lenders like Toss Bank. But subject to the authority’s suggestion to keep the maximum amount of credit loans allowed for individuals below their annual income, the new online bank set the maximum loan limit at 270 million won ( $ 228,420). The borrowing limit for loans via overdraft accounts at Toss Bank will be approximately 100 million won.
By Choi Jae-hee ([email protected])