South Korea to probe bank loans

South Korea's central bank will evaluate loans extended by major banks to households and firms in a bid to ensure financial stability.

A new law widened the role of the Bank of Korea to cope with financial instability.

Monetary policymakers at the Bank of Korea agreed  to audit major banks and evaluate the status of their lending and interest rates, according to the BOK.

The probe will likely be conducted sometime next month, after the BOK sends a request to the Financial Supervisory Service, the country's financial watchdog, later this month.

"We cannot announce the list of banks that are subject to the probe, but it will be aimed at banks that are influential in the market," said an official at the BOK.

Kookmin Bank, the country's largest lender, Shinhan, Woori and Hana are likely to come under the BOK's scrutiny, as well as the state-run Industrial Bank of Korea, Citibank and Standard Chartered Bank.

The probe will focus on loans extended to borrowers with bad credit, heavily indebted customers and others that are the most vulnerable to the economic recession, according to the official.

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