South Korea cracks down on illegal lenders while aiding struggling borrowers
South Korea has intensified its crackdown on illegal private lending while expanding support for struggling borrowers. On October 23 The push against illegal lending comes as authorities seek to ease financial inequality. President Lee Jae Myung declared on X (formerly Twitter) that borrowers would not need to repay loans exceeding the legal interest ceiling, which was lowered to 20 percent in 2021. Kim Yong-beom, the presidential office’s policy chief, reaffirmed the administration’s commitment to eradicating illegal lenders and reducing financial disparities.
To support vulnerable borrowers, policy loans like Sunshine Loans already provide over 10 trillion won annually to those with medium or low credit ratings. The government is also accelerating relief procedures for victims of illegal lending, ensuring faster and more proactive assistance. Chairman Lee Eog-weon shared updates on stricter protections under the Loan Business Act. The revised decree aims to strengthen oversight and impose harsher penalties on predatory lenders, with officials vowing to use the full force of state authority to punish violations.
The measures include both stricter enforcement and expanded financial aid. Over 1 million people are now benefiting from debt adjustment programmes, while small business owners can access up to 20 trillion won in relief. Authorities have made clear that illegal lending will face severe consequences, with faster support for affected borrowers moving forward.
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