Money Lending Act amendment bill to begin this month

The ruling and opposition parties will advance an amendment to the Money Lending Act that nullifies both principal and interest on anti-social loan contracts involving bodily harm, assault, threats, human trafficking, and sexual exploitation. Unregistered money lenders will now be clearly defined as illegal private lenders. To curb the rise of small-scale money lending businesses, the equity capital requirement for lenders will increase from 10 million won to 100 million won for individuals and from 50 million won to 300 million won for corporations. The Democratic Party of Korea aims to make eradicating illegal private lending a key legislative priority, increasing the likelihood that related bills will be addressed in the September session. After the Dong-A Ilbo Hero Content Team's series of articles titled "Trap: Caught in a Money Trap," which exposed the reality of illegal loan sharking organizations, the government and the National Assembly have begun to push for comprehensive measures in earnest.

On Wednesday, People Power Party Policy Committee Chairman Kim Sang-hoon, after a party-government meeting on “Measures to Protect Financially Vulnerable Groups and Eradicate Illegal Private Loans,” stated, “We have finalized plans to eradicate illegal private loans and improve the system to address these serious threats to people's livelihoods.” He emphasized the party's intent to expedite the legislative process while enhancing investigations, crackdowns, and punishments. The People Power Party will soon receive a revision bill from the Financial Services Commission and propose it as a lawmaker's bill.

The Democratic Party of Korea previously introduced 11 amendment bills to the Loan Business Act, including nullifying interest on loans exceeding the legal maximum rate (20%) and loans from illegal private lenders, and tightening capital requirements. “Eradicating illegal private loans has been central to Representative Lee Jae-myung’s policy since his time as mayor of Seongnam,” a party member remarked. “With both parties aligned on related amendments, collaborative discussions are anticipated."


조권형 기자 buzz@donga.com