K-Bank extended its suspension of new minus account openings until August 31, prolonging a measure originally set to end on July 31. The extension reflects efforts to comply with financial authorities' household loan quota targets for this year. Banks across South Korea are implementing various credit tightening measures including new account suspensions, daily and monthly limit management, and reduced lending caps as regulatory scrutiny intensifies on consumer credit growth.
A K-Bank official stated the sales suspension period was extended by one month to ensure stable household loan management. The bank is considering further extensions based on whether monthly credit loan quota limits are exceeded. If implemented, this would make new minus account openings through K-Bank impossible throughout the third quarter (July-September).
Financial Authorities Monitor Internet Banks' Minus Account Growth
Financial authorities are closely examining minus account growth levels at three internet banks: Kakao Bank, K-Bank, and Toss Bank. Internet banks have relatively higher monthly active users (MAU) on their applications compared to traditional banks, making them more accessible and potentially accelerating limit-based loan growth.
Kakao Bank operates under daily quota management, with total daily limits set at fixed amounts. This effectively makes minus account openings impossible without participating in early-morning "open run" attempts. As internet banks restrict access, demand has shifted to traditional banks, prompting the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup) to implement preemptive management measures.
Shinhan Bank, which had not previously imposed new account limit restrictions, decided to reduce limits to 50 million won starting next month.
Demand Deposits Drop 41 Trillion Won Through July 23
The five major banks' demand deposits decreased 41.0342 trillion won from the end of the previous month through July 23 this month. This represents double the decline recorded in January (22.4704 trillion won decrease), which was the largest reduction this year. The withdrawal pattern follows recent stock market declines as investors seek to buy at lower prices.
Investment demand typically spreads by withdrawing funds from demand deposits and utilizing limit-based loans. Minus accounts and other credit loans have become the next target for money movement as stock purchasing activity intensifies.
Minus Account Utilization Rate Reaches 45 Percent
The five major banks' minus account balance increased 652.6 billion won through July 23 this month, reaching 43.9338 trillion won. This represents an increase of over 4 trillion won compared to 39.8566 trillion won at the end of the first quarter. The current level marks the highest since October 2022 (43.6609 trillion won) when comparing historical month-end balances.
The utilization rate—calculated by dividing used amounts by maximum limit settings—averaged 44 percent last month and has risen above 45 percent this month, approaching the 50 percent threshold. This represents a 10 percentage point increase compared to typical utilization rates in the mid-30 percent range.
A financial industry official commented that K-Bank's decision to extend the suspension for another month signals it will likely halt operations throughout the third quarter. The official added this demonstrates a declarative commitment to unconditionally comply with authorities' quota management targets this year, forcing other banks to implement daily and monthly limit management measures as well.
FAQ
What did K-Bank announce on July 28?
K-Bank announced it would extend its suspension of new minus account openings until August 31, one month beyond the original July 31 end date. The bank cited the need for stable household loan management to comply with financial authorities' quota targets.
Why are South Korean banks tightening minus account access?
Banks are implementing tightening measures to comply with financial authorities' household loan quota regulations for this year. The measures include suspending new account openings, managing daily and monthly limits, and reducing new loan caps as regulatory oversight on consumer credit growth intensifies.
How much did demand deposits decrease at major South Korean banks this month?
The five major banks' demand deposits decreased 41.0342 trillion won from the end of the previous month through July 23, double the 22.4704 trillion won decline recorded in January, which was the largest reduction earlier this year.
