The Bank of Korea has asked the Financial Supervisory Service to conduct a joint probe into the country’s household and corporate debt situations.

The BOK made the decision Thursday and the financial regulator of its intention, a move that reflects its expanded supervisory role.

The formal request marked the first time the central bank revealed its intent to play a role in stabilizing the overall financial system in addition to its primary function of keeping inflation at bay.

In the document sent to the FSS, the country’s top bank said the purpose of the joint investigation is to “collect information needed to establish monetary policy including financial stability.”

The BOK said it plans to review local banks’ lending practices and loan details in connection with households and small and medium-sized enterprises.

As for household debt, the central bank intends to identify current situations in more detail based on debt size, repayment methods, income levels and age of borrowers.

“The focus of the joint investigation will be placed on household lending to those with low credit ratings or struggling with multiple loans,” said an official at the BOK.

Analysts point out that Korea’s household debt, if not contained properly, could pose a serious threat to the economy, particularly at a time when export growth and domestic spending remain sluggish.

The joint investigation will be conducted on major banks including Kookmin, Shinhan, Woori, Hana and Citi.

Lending extended by the banks to small companies will be also reviewed along with the borrowers’ credit performances.

About 10 officials from the BOK would be dispatched to the joint team, which will offer a guide about how the bank would carry out similar investigations in the coming months.

Under the current rule, the FSS is required to launch the joint investigation within a month after receiving a request from the BOK, so the probe is now expected to start in April.

By Yang Sung-jin (insight@heraldcorp.com)