South Korea's financial regulator said Friday it will expand the disclosure of information on loan-deposit rate differences as part of efforts to promote competition in the banking sector amid criticism that it has been bent on making profits from the "interest business" without diversifying income sources.

Banks have been providing information on deposit-loan spreads on new lending and savings since mid-2022 in a bid to enhance transparency in their operation and provide customers with better choices in selecting financial products.

"In addition to the current disclosure of loan-deposit rate differences on new lending, banks will additionally disclose the differences based on their balance," the Financial Services Commission said in a press release.

"Along with deposit rate differences, detailed interest rate information, such as loan rates (household loans and business loans) and deposit rates, all on a balance basis, will be disclosed," it added.

The FSC said it will revise relevant regulations and build a system to enforce the expanded disclosure rule by the end of July.

In a related move to boost competition, the FSC said it has also begun "full-scale discussions" on the possibility of authorizing new banks or allowing non-banking firms, such as insurers, to enter the banking sector.

Banks have been under fire for reaping record profits from interest income and handing out hefty bonuses to employees while people are suffering from high borrowing costs driven by the central bank's inflation-fighting monetary tightening.

President Yoon Suk Yeol recently called for curbing excessive profits of banks and instructed financial regulators to draw up measures to ensure "the people do not feel out of place due to banks' 'money feast.'"

The financial regulator has since urged banks to diversify their income sources, other than interest payments. (Yonhap)