Swamped under a sea of red ink, South Koreans are sliding deeper into debt - and the government has decided enough is enough.

It has decided to target credit card companies, whose "reckless" practices have encouraged consumers to embark on a shopping binge.

The result is a roster of 2.5 million people - one in 10 of the workforce - behind in making payments on the credit card debt, not least because many South Koreans use their cards for cash advances.

That, some analysts fear, could spell trouble for economic recovery if personal bankruptcy soars.

Unco-operative

Attempts to persuade card issuers to restrict cash withdrawals have failed, and now the government is planning to get tough.

"The government has been trying to rectify the conduct of card companies' management who are keen on issuing credit cards," said the Financial Supervisory Service, the country's main regulator.

"But their reckless operation in the past has resulted in higher delinquency rates and aggravated their conditions.

"Given that a large number of households use credit card loans for urgent cash, we cannot rule out the possibility that household debt problems originate from credit card firms."

Unpaid loans had reached 263.4bn won ($218m; �138m) by the end of September.

Toughening up

The FSS found that three card companies had ignored a request to cut cash advances to less than half total borrowings.

So from April 2003, the card issuers must set aside more assets to back their loans, as much as the 8% of outstanding loans that is standard in the banking business.

They must also write off debts older than six months, and use a stricter yardstick when judging someone's creditworthiness.

If they do not, the nine main non-bank issuers - there are also 16 banks which issue cards, but usually under more stringent terms - may be barred from borrowing or even forced to change management.

In extreme cases, they could be shut down.