As the ruling and opposition parties have announced their intention to prepare amendments to the Loan Business Act to eradicate illegal private lending and speed up the passage of the National Assembly, the green light has been turned on for passage during the September regular session of the National Assembly. On the 11th, the People Power Party finalized a plan at the ruling and opposition parties’ meeting to nullify anti-social loan contracts such as those involving bodily harm and to strengthen the level of punishment for illegal lending to the highest level under financial laws and began preparing the bill. The People Power Party believes that since these contents are the maximum level of regulation permitted by law, the opposition party is likely to accept them. A party official said, “We will propose the bill as a member legislation right after Chuseok,” and “We expect to process it at the plenary session next month.”
The Democratic Party of Korea, which holds the key to passing the National Assembly law, has had key pro-Lee Jae-myung lawmakers, including Park Sung-joon and Chun Jun-ho, propose amendments to the Loan Business Act one after another. At the Democratic Party lawmaker workshop late last month, the amendment of the Loan Business Act was selected as one of 165 major livelihood tasks, and the plan is to begin discussions in the relevant standing committee, the Political Affairs Committee, as early as this month. The ruling and opposition parties’ bills have many overlapping contents, such as strengthening punishment for violations of the Loan Business Act and raising minimum capital requirements for loan businesses, so it is expected that they will quickly find common ground.
The revision bill to the Money Lending Act that the government and ruling party are pushing for today contains the will to fundamentally eradicate illegal private lending and rectify the money lending market. In particular, the core content is to establish grounds for invalidating not only interest but also principal in the case of money lending contracts concluded through bodily harm, human trafficking, sexual exploitation, and assault and threats. Financial Supervisory Service Governor Lee Bok-hyun met with reporters and said, “There are grounds in the Civil Act for invalidating violations of good faith and social customs,” and “We will clearly establish the legal basis so that the court can easily make a judgment of invalidity and make the public and the court aware of money lending contracts that are invalid.”
In relation to this, the Democratic Party has proposed an amendment that would invalidate the interest portion of a loan contract that exceeds the legal interest rate, and in the case of illegal private lenders, invalidate the entire contract. This is a broader measure than the People Power Party, which only invalidates anti-social contracts. A Democratic Party official said, “There are some differing opinions on whether to recover not only the interest but also the principal for illegal private lending contracts.”
The revision bill includes a strengthening of punishment for unregistered loan sharks from the current 5 years in prison or a fine of up to 50 million won to 5 years in prison or a fine of up to 200 million won, and for violation of the maximum interest rate from 3 years in prison or a fine of up to 30 million won to 5 years in prison or a fine of up to 200 million won. The Democratic Party is also discussing internally the need to strengthen punishment, including raising the upper limit of fines.
The ruling party has proposed a plan to strengthen the minimum capital requirement for loan business registration to 100 million won for individuals and 300 million won for corporations, while the Democratic Party is reviewing a plan to set the minimum at 100 million won and the maximum at 300 million won. A Democratic Party official from the Political Affairs Committee said, “As the threshold for loan business is raised, it will be difficult for ordinary people to borrow money urgently, so we will also discuss measures to support ordinary people’s finances.”
Reporter Cho Kwon-hyung [email protected]
Reporter Yoon Da-bin [email protected]
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2024-09-12 22:03:33