Interest Rates on Microfinance Products Also Lowered Amid Criticism of 'Donjanchi'

Hana Bank President "Considering Additional Interest Rate Cut for Saeheemang Holssi"
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Amid criticism of a 'money feast,' banks have lowered or are considering lowering interest rates on financial products for the underprivileged, such as the Sunshine Loan and New Hope Holssi Loan.

[Image source=Yonhap News]

On the 23rd, Lee Seung-yeol, CEO of Hana Bank, stated at the 'On-site Meeting with Financial Consumers and Experts to Expand Win-Win Finance' held at Hana Bank's headquarters in Jung-gu, Seoul, "Although the interest rate on the New Hope Holssi Loan was lowered by 1 percentage point last year, it still maintains a high rate close to 9%. We will examine whether there is room to reduce it by about 1 percentage point more and actively pursue this."

Lee's remarks came amid criticism that the banking sector's efforts toward win-win finance are insufficient. Lee Hyo-seop, a senior researcher at the Korea Capital Market Institute, emphasized, "Loan interest rates are too high, causing a heavy interest burden on self-employed individuals, small business owners, and many small and medium-sized enterprises," adding, "It is the most important solution for well-off banks to make some sacrifices to reduce the interest burden on vulnerable groups and SMEs." Lee Bok-hyun, Governor of the Financial Supervisory Service, who attended the meeting, also said, "5 to 10% of banks' interest income did not return to consumers," urging, "The banking sector must make more active efforts to practice win-win finance, such as easing the burden on vulnerable borrowers, to share the pain of the underprivileged going through difficult times."

Hana Bank plans to implement the 'Cashback Hope Program' for 'Sunshine Loan 15' customers for one year starting mid-next month. New customers will receive 1% of their loan balance in 'Hana Money' (points that can be used like cash) paid in installments over 12 months, while existing customers will receive it in a lump sum.

Among regional banks, DGB Daegu Bank will implement an interest rate reduction on the 'Sunshine Loan Bank.' For one year this year, it plans to temporarily lower the rate by 0.5 percentage points to reduce the interest burden on the underprivileged and vulnerable groups. The loan limit has also been raised from the previous maximum of 20 million won to a maximum of 25 million won.