250,000 policy loan users spend over 70% of income on debt repayment

A significant portion of policy loan users are struggling with overwhelming debt. Data from the Financial Services Promotion Service (FSPC) reveals that 250,000 individuals, or 16.1% of policy loan guarantee product holders, spend over 70% of their income on debt repayment. This ratio, known as the Debt Service Ratio (DSR), indicates a severe financial strain.

Compounding the issue, over 100,000 users (6.6%) have a DSR exceeding 100%, meaning their annual debt obligations surpass their income. These individuals are particularly vulnerable to default if their income decreases or unexpected expenses arise.

The FSPC is exploring mandatory pre-debt counseling for applicants who exceed a certain DSR threshold. Currently, the service guides users with a high risk of default toward debt adjustment programs during in-person consultations. However, with 88.7% of policy loan guarantee applications processed online, timely intervention is challenging. Without proactive debt management, many users may only receive support after falling into delinquency.

"The mandatory pre-debt counseling plan is currently under review," an FSPC official stated. "We plan to finalize specific operational plans after consulting with relevant agencies."

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The mandatory pre-debt counseling plan is currently under review. We plan to finalize specific operational plans after consulting with relevant agencies.