South Korean financial authorities on Sunday said that illegal money lenders cannot impose annual interest rates of more than 6 percent, in a move to protect consumers in the pandemic-hit economy.

The Financial Services Commission (FSC), the country's financial regulator, drafted a new set of regulations that lowers the maximum annual interest rate on loans extended by unregistered lenders to 6 percent from the current 24 percent.

The modifications to related laws will be submitted to the National Assembly for approval within this year.

The regulator said undocumented loan contracts and loan extensions will be nullified.

The loan sharks will also be required to preserve the contracts and the lending-related documents to ensure consumer safety, according to the FSC. (Yonhap)