Banking Sector, Flood of Youth Financial Support

[Asia Economy Reporter Song Hwajeong] Banks are offering various financial supports to help the youth.

According to the financial sector on the 6th, Woori Bank started the 'Youth Entrepreneur Recovery Program' on the 3rd and has officially launched various financial supports for the youth in the second half of this year.

The Youth Entrepreneur Recovery Program, the first of its kind in the banking sector, provides an opportunity for young entrepreneurs who had difficulty obtaining loans due to credit rating downgrades caused by past business failures to get back on their feet. Corporations whose representatives are between 19 and 39 years old, have closed their business within the last five years, and have an external credit rating of 6(+) or lower are eligible to apply. Through a special review reflecting non-financial factors, companies with future growth potential are selected and supported with up to 300 million KRW per case, repayable in installments over a maximum of five years.

Additionally, Woori Bank plans to implement support measures for home ownership for the youth in the second half of the year, starting with this financial support program.

IBK Industrial Bank of Korea is the first in the financial sector to offer the 'Youth-Linked Tomorrow Filling Deduction.' This policy-oriented deduction product is designed to encourage long-term employment and inflow of excellent workers in small and medium-sized enterprises (SMEs). Both companies and workers jointly contribute, and workers who have been employed for a certain period receive a performance reward. It helps SMEs retain key personnel long-term and allows workers to accumulate a lump sum. To reduce the burden of subscription, the subscription period has been shortened from 5 years to 3 years compared to the existing Youth Tomorrow Filling Deduction, and the monthly payment by SMEs has been lowered from an average of 240,000 KRW to 140,000 KRW. Additionally, subscribers receive educational and welfare services such as job competency e-learning, group accident insurance enrollment, and vacation expense support.

The target group includes workers who have matured their Youth Tomorrow Filling Deduction contracts sold by the Ministry of Employment and Labor and are still employed at the respective companies. Both companies and workers pay 140,000 KRW monthly, and after 3 years, workers can receive the maturity amount (10.08 million KRW plus interest), which is more than twice the amount they invested.

As a government policy project, tax benefits are also provided. Companies can receive a 25% tax credit on the amount paid for workers under personnel and R&D expenses, and workers can get a 50% reduction in earned income tax on the amount paid by the company when reinvesting the maturity amount of the Youth Tomorrow Filling Deduction.

Hana Bank exclusively sells the 'Youth Tomorrow Savings Account.' This installment savings product was introduced by the Ministry of Health and Welfare to help economically disadvantaged youth accumulate a lump sum. The subscription amount ranges from 100,000 KRW to 500,000 KRW, with a subscription period of 3 years. The interest rate is a base rate of 2.0% per annum plus preferential rates, up to a maximum of 5.0% per annum. Eligible subscribers are employed individuals aged 19 to 34 with a monthly income of 2 million KRW or less. If they save 100,000 KRW monthly, the government provides an additional 100,000 to 300,000 KRW monthly depending on income. Applications were accepted until the 5th.