Anchor: Policymakers alarmed by a rise in Korean household debt have ordered banks to tighten up credit availability. 
Kurt Achin has this report.

Report: In a matter of weeks, it won’t be as easy for South Koreans to take out a loan as it is now.

That’s because later this month, banks will have to implement a mandatory Debt Service Ratio -- or DSR -- screening for loan applicants.

The screening will measure how much a loan applicant already has to pay out in principal and interest in proportion to their annual income. Applicants whose ratio indicates they owe too much money already may find themselves turned down for new loans.

Financial Services Commission Chairman Choi Jong-ku says different DSR standards will be in effect for commercial banks, regional banks and state-run banks. He also said individual banks may have several sets for different purposes. Details of the new rules are expected to be made public later this week.

The new policy is a response to a surge in household debt in South Korea, which reached a record high of nearly one-thousand-500 trillion won, or one-point-32 trillion dollars, as of the end of June. 

Many Koreans who face involuntary retirement or layoffs have taken out loans, either to make ends meet or, in many cases to start small businesses that face a high risk of failure.

When any one borrower defaults on a loan, it’s unfortunate for a single family. When defaults happen in large numbers, it can threaten the stability of the economy. That’s a danger policymakers in Seoul are trying to avoid.
Kurt Achin, KBS World Radio News.