Internet Banks Expanding Inclusive Finance

[Asia Economy Reporter Song Hwajeong] As inflation and rising interest rates exacerbate difficulties for ordinary citizens, internet-only banks are actively expanding 'inclusive finance.'

According to the banking sector on the 12th, Toss Bank plans to launch a low-income financial product called 'Haetsalron Bank' in the second half of the year.

Haetsalron is a policy financial product provided based on guarantees from the Korea Inclusive Finance Agency to low-income and low-credit individuals who cannot normally access loans from financial institutions.

The Haetsalron Bank product to be launched by Toss Bank offers a variable interest rate lower than the fixed 15.9% interest rate product 'Haetsalron15,' with a maximum limit of 25 million KRW. Eligible borrowers are low-income and low-credit individuals who have used policy financial products such as Saehope Hope Loan, Smile Microcredit, Haetsalron15, and Haetsalron17 for more than six months, and whose debt or credit status has improved.

Toss Bank is the second internet-only bank to offer Haetsalron, following Kakao Bank, which has been handling the fixed 15.9% interest rate product Haetsalron15. Since launching Haetsalron15 in October 2020, Kakao Bank has supplied a total of 166.8 billion KRW as of last month.

This year, K Bank and Toss Bank, which have entered the corporate loan market, are also preparing to launch low-interest refinancing loan products for self-employed and small business owners supported by the Korea Credit Guarantee Fund in the second half of the year.

This program is promoted according to the government's 'Customized Financial Support Plan for Self-Employed and Small Business Owners,' aiming to help small business owners burdened by high-interest loans over 7% refinance to loans with interest rates below 6.5%. To qualify for this low-interest refinancing program, borrowers must be normal borrowers affected by COVID-19, be individual business owners or corporate small business owners, currently conducting normal business operations, and have the ability to repay the low-interest refinancing funds. The loan limit is 50 million KRW for individual business owners and 100 million KRW for corporate small businesses. There is a two-year grace period followed by three years of installment repayment.