The recent revelation that some banks manipulated lending rates and earned billions of won in interest is causing a stir.
According to the financial sector on June 27th, the Financial Supervisory Service (FSS) will conduct an intensive inspection of Kyongnam Bank, KEB Hana Bank, and Citibank Korea, which have reported errors in interest rate calculations
In the case of Kyongnam Bank, which has overestimated the interest rate of 12,000 household loans, reported that the same incident occurred at about 100 out of 165 stores.
Kyongnam Bank estimated the amount of excess interest loan to be about 2.22 million dollars, and announced that it will refund the money by next month.
According to a statement by Kyongnam Bank, it was reported that there was no deliberation on the result of the self-inspection. In the registration process, there was a mistake that did not properly check the annual income of the borrower.
The FSS, however, believes that repeating the same mistakes over a long period of time at about 100 locations is a serious problem of system laxity and internal control.
The FSS explained that, although the size of KEB Hana Bank and Citibank Korea is smaller than that of Kyongnam Bank, the system of calculating loan interest rate was also found to be very poor.
Hana Bank, for example, set loan rates by adding and applying non-regulative factors to its computerized ‘system interest rate’, and a store employee or a brand manager then applied the highest interest rate arbitrarily regardless of individual, self-employed, or corporate loans.
Citibank Korea, on the other hand, had a problem with loan interest rates being high because it was entered as not having collateral even if it had, and on the contrary, there were cases where the loan rate was low because it was entered as having collateral even if it did not have any collateral.
The three banks posted their progress and apology on the web and branch offices on June 27th, and announced plans to return them as early as next month. The FSS will not only inspects these banks, but also other local banks that were excluded from the loan interest rate system test.
