Bank loans taken out by self-employed business owners reached a record high last month, as local lenders were in a fierce competition to extend loans to retired people, industry data said Sunday.

Outstanding loans extended by the country’s five major banks, including Kookmin Bank and Shinhan Bank, to self-employed people reached 102.8 trillion won ($88.8 billion) at the end of last month, compared with 92.8 trillion won at the end of last year, according to the data.

The increase in such loans in the first 11 months of the year compares with a 4.1 trillion won gain in total seen last year, the data showed.

After retiring, baby boomers born in the 1950s and 1960s have been in a rush to start small-sized businesses.

The number of self-employed people in the country reached 5.66 million at the end of last month, up some 130,000 from the end of last year.

Market watchers said local lenders have been reluctant to lend money to smaller firms and self-employed people out of fear that such loans may turn sour, worsening their financial soundness.

But recently, they have aggressively extended such start-up loans.

“A prolonged economic slump could boost soured loans extended to self-employed business owners,” said Park Duck-bae, a researcher at the Hyundai Research Institute.

The researcher said local lenders should tighten lending regulations on such loans in order to curb a rise in problem loans. 

(Yonhap News)