South Korean Banks Face 100 Trillion KRW Overdraft Credit Risk

Unused credit limits on overdraft accounts in South Korea have surpassed 100 trillion KRW, creating a potential risk for the national economy ^[1].

This volume of available credit is significant because it provides a pool of cheap, immediate capital that investors can use for speculative stock-market activities. This phenomenon, often referred to as “debt-investment” or *bit-tu*, concerns regulators who fear the credit could act as a catalyst for financial instability.

At the five major commercial banks, the outstanding loan balance on negative-balance accounts alone exceeds 40 trillion KRW ^[1]. When regional and internet banks are included, the total unused credit limit across the sector surpasses 100 trillion KRW ^[1].

Professor Seok Byung-hoon of Ewha Womans University said that once a negative-balance account is opened, its unused credit limit can be maintained for 10 years ^[1]. This long-term availability allows users to maintain a safety net of credit that can be deployed quickly into volatile markets.

Seok said that this situation has a high possibility of becoming the "kindling" for further debt-driven investment ^[1]. The ability to access these funds without undergoing new credit reviews for a decade creates a systemic vulnerability.

Financial experts describe the situation as a "time-bomb" because the credit is already approved and waiting to be spent. If a market surge occurs, a massive influx of this dormant credit could inflate asset bubbles further, increasing the risk of a sharp correction that would leave borrowers in deep debt.