Overdue loans at Korea’s 10 largest private lenders surpassed 600 billion won ($535 million) earlier this year, data showed Tuesday, raising concerns over its impact on household debt.

The amount of overdue loans at the 10 players, including market leaders A&P Financial and Sanwa Money, reached 609.9 billion won as of January, up 52.1 percent from a year earlier, according to the data by industry sources and the Financial Supervisory Service.

The data also showed that the default rate of the private lenders jumped 3.45 percentage points on-year to 12.39 percent.

The data comes amid fears heavy household debts are likely to cripple economic growth and domestic demand in Asia’s fourth-largest economy.

In the last few years, the growth rate of household debts at non-bank financial firms outstripped that of lenders. Outstanding household loans at non-bank institutions stood at 402.3 trillion won as of the end of 2011, more than double from 193.8 trillion won at the end of 2004.

In the same period, household debts at banks grew from 276.3 trillion won in 2004 to 455.9 trillion won at the end of 2011.

Market watchers attributed the sharper increase in household loans of non-financial firms to grim economic circumstances.

“A growing number of people are depending on non-financial firms and private lenders as their income decreases. It seems a suspension of larger private lenders also prompted more borrowers to rush to smaller players,” said Park Deok-bae, a researcher at Hyundai Research Institute.

Earlier this year, major private lenders had their operations suspended for six months for reaping illegal profits through “unfair” interest rates.

The local financial regulator vowed to overhaul the private money market to counter growing public outcry over its notoriously high interest rates. 

(Yonhap News)