Banks to Provide '10 Trillion+ α' Support Over 3 Years to Vulnerable Groups

[Asia Economy Reporter Yoo Je-hoon] The banking sector will engage in over 10 trillion won worth of social contribution over the next three years. This comes amid growing criticism of banks’ “interest profiteering” during the period of rising interest rates.

The Korea Federation of Banks announced on the 15th that it will promote a “Bank Social Contribution Project” to share the difficulties of the national economy and fulfill social responsibilities.

First, the Federation will use 500 billion won in joint social contribution funds to strengthen support for low-income and low-credit individuals. To prevent vulnerable groups from falling into illegal private loans, 150 billion won will be allocated as emergency living expense support, and 90 billion won will be used as low-interest small loans for ordinary citizens who are diligently repaying debts through the Credit Recovery Committee and others.

Additionally, 160 billion won will be invested in small and medium-sized enterprise (SME) guarantee funds to alleviate funding difficulties and financial burdens for SMEs. Furthermore, 100 billion won will be used for guarantee projects for socially vulnerable groups and public interest projects through the banking sector’s social contribution platform, “Bankit.” Approximately 3 trillion won will be supported for these projects over three years.

Special contributions to the Korea Credit Guarantee Fund and the Korea Technology Finance Corporation will also be expanded to strengthen SME support. The five major banks (KB Kookmin, Shinhan, Hana, Woori, and NH Nonghyup) will increase their special contributions to public guarantee funds from about 260 billion won annually to around 320 billion won, adding 60 to 70 billion won over the next three years. The additional support over three years is expected to reach about 3 trillion won.

The banking sector will also significantly expand its own supply of financial services for ordinary citizens over three years, providing 4 trillion won in support. Banks will increase the supply of social finance products such as Saehope Hope Loan by 60 billion won annually over three years, beyond the existing target of 640 billion won per year.

Moreover, the banking sector will implement programs to refinance high-interest loans from the secondary financial sector with bank loans (about 500 billion won), expand low-interest refinancing loans for small business owners (guarantee scale increased by about 1 trillion won), and support vulnerable borrowers by each bank (about 700 billion won).

A representative from the Korea Federation of Banks stated, “We intend to continue actively giving back to society to meet the expectations of the people.”