South Korean banks overcharge borrowers

South Korea's major banks have been charging borrowers higher interest rates over the past few weeks.

Interest was miscalculated for about 40,800 loans issued by seven banks: KB Kookmin, Woori, Shinhan, Hana, Nonghyup, Korea Exchange and Industrial Bank of Korea.

Woori Bank has the biggest number of overpriced loans with 21,000 cases, followed by Hana with 6,250, Nonhyup with 4,530, KB Kookmin with 4,350 and Shinhan with 3,700.

The erroneous disclosure of an index has been linked to overpriced loan interest rates. The cost of funds index, a barometer for the benchmark interest rate, published on Sept. 17 was based on miscalculated data.

The banking lobby group said the mishap was unintentional and admitted that it took several days to issue a re-disclosure after detecting the fault.

“We detected the misstatement on Sept. 27 and made it public on Oct. 8,” a KFB official said.

The Financial Supervisory Service has launched a probe into the incident as to whether there was a technical defect or other factors.

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