野 Controversy over management intervention through “bank additional interest rate law”

According to the National Assembly and the financial sector on the 10th, the first subcommittee on bill review of the National Assembly Political Affairs Committee will hold a meeting as early as the 25th of this month and begin discussing the amendment to the Banking Act proposed by Democratic Party lawmaker Min Byeong-deok. The key point of the amendment is to exclude education tax and statutory contributions when calculating additional interest rates. The basis for strengthening the disclosure of detailed items of additional interest rates and imposing fines for violations of disclosure is also included.

The additional interest rate refers to the interest rate added to the Bank of Korea’s base interest rate when determining the loan interest rate. It consists of business costs (labor costs, etc.), risk management costs, legal costs (education tax, statutory contributions), and target profit rate. Currently, this item is disclosed in the Korea Federation of Banks’ lending interest rate model standards, and the Democratic Party’s idea is to specify this in the Banking Act.

The reason the Democratic Party is trying to propose this bill is because it believes that the current interest rate system needs to be revised as banks are earning large interest profits due to the difference in interest rates between deposits and loans. In particular, the attempt to include education tax and statutory contributions in the calculation of additional interest rates reflects the view that banks are passing on costs that they themselves should bear to borrowers. On the other hand, the banking sector appears to be finding it difficult to agree to the request to exclude additional items in a situation where deposit insurance premiums and reserves have already been deducted from the additional interest rate legal costs from October 2022 due to comments from the political world.

For this reason, it is reported that the Financial Services Commission, Financial Supervisory Service, and Korea Federation of Banks recently held a meeting to discuss ways to respond to the legislation of the additional interest rate calculation method. Financial authorities and the banking sector argue that directly regulating interest rates determined by supply and demand can infringe on the autonomy and efficiency of the financial sector.

Education tax, which is excluded from the additional interest rate calculation, is paid by financial and insurance companies at 0.5% of the profit amount. The Democratic Party’s position is that rather than passing the cost of paying education tax on to borrowers, banks should bear it directly as a matter of ‘social responsibility’. On the other hand, banks argue that the taxation system in which borrowers bear the education tax is reasonable, as they also reflect the education tax in the prices of gasoline, vehicles, and alcoholic beverages.

Another item, statutory contribution, refers to the amount that a bank contributes to each fund in proportion to the loan amount when a guaranteed loan, which is a loan made through the Credit Guarantee Fund, Technology Guarantee Fund, Regional Credit Guarantee Foundation, and Housing Finance Credit Guarantee Fund, is executed. . Since guaranteed loans are often targeted at vulnerable groups, there is a high possibility of guarantee accidents such as long-term delinquency.

The banking industry says that if statutory contributions are removed from the interest rate calculation and changed to direct payment by the bank, guaranteed loans may be reduced in the future. This means that financial support for small business owners may actually be weakened.

The banking industry also expressed the opinion that even if education taxes and statutory contributions were abolished, the effect of lowering loan interest rates would not be as great as expected. This is because the bank can adjust the loan interest rate by raising the target profit rate or reducing the preferential interest rate, which is another item. An official from the financial sector said, “If autonomous competition between banks is maintained, there is a high possibility that a more favorable interest rate environment will be created for financial consumers. If legal control is placed, banks will only set loan interest rates at similar levels as if they were colluding, ultimately reducing consumer choice.” “This will decrease further,” he said.

[채종원 기자]