SEOUL, March 30 (Yonhap) — South Korea will lower the maximum interest rate starting in July as part of efforts to ease financial burdens on low-income people, the financial regulator said Tuesday.

The maximum legal interest rate that private lenders can charge will be cut to 20 percent from the current 24 percent starting July 7, according to the Financial Services Commission.

The move comes as the Cabinet approved a revised enforcement decree on the Credit Business Act and the Interest Limitation Act.

The amended decree will be promulgated on April 6 and come into effect after a three-month grace period. The new legal lending cap will be applied to new loans or those whose contracts are renewed or extended.

It will be the second reduction in the maximum legal interest rate in three years. In 2018, the government lowered the lending rate ceiling to 24 percent from 27.9 percent.

The financial regulator said it will come up with follow-up measures to prevent any fallout from the planned lending rate cut on borrowers with low credit ratings.’