On-site Meeting to Expand Win-Win Finance Scheduled for the 20th
Lee Jae-myung, leader of the Democratic Party of Korea, is scheduled to meet with bank presidents to discuss ways to expand win-win finance. In particular, they are expected to exchange opinions on lowering loan spread rates.
On the 20th, the Democratic Party will hold the "Democratic Party Policy Committee On-site Meeting with the Banking Sector for Expanding Win-Win Finance" at the Korea Federation of Banks. Lee Jae-myung, along with Democratic Party lawmakers from the Policy Committee, will meet with the heads of the five major commercial banks (KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup), the president of IBK Industrial Bank, and Cho Yong-byeong, chairman of the Korea Federation of Banks, to discuss win-win finance measures.
One of the issues to be discussed at the meeting is the loan spread rate. Kang Jun-hyun, secretary of the Democratic Party Policy Committee, said, "Since the Bank of Korea has lowered interest rates amid difficult circumstances for ordinary people, banks should also lower rates so that people can feel the effect," adding, "The Financial Services Commission chairman also responded in the National Assembly that the effect of the rate cut is slow to be felt, so this meeting was organized by the Korea Federation of Banks." Bank loan interest rates are determined by adding a spread rate, which depends on creditworthiness and other conditions, to the benchmark interest rate. Lowering the spread rate reduces the actual loan interest rate, thereby easing borrowers' interest burdens.
They will also discuss ways to overcome difficulties in the low-income economy. Representative Kang said, "We will share the situation where delinquency rates among low-income people are rising and even those who take out loans for living expenses are unable to repay, and we plan to hear the banks' strategies regarding this."
Expansion of policy-based low-income finance is also expected to be discussed. Banks are required to contribute a certain percentage of their household loan balances to policy guarantee institutions such as the Korea Credit Guarantee Fund or the Korea Inclusive Finance Agency. This common contribution rate was temporarily raised from 0.035% to 0.06% from March to October last year through an amendment to the "Act on Support for Financial Life of Low-Income People." Since the maximum rate under the law is 0.1%, discussions may be held on banks making higher contributions.
Meanwhile, Representative Kang drew a line regarding concerns that this meeting might excessively pressure the banking sector. He said, "This meeting was created by the Policy Committee after holding meetings with low-income people and small and medium-sized enterprises to hear about their difficulties and to work together with banks to overcome these challenges."
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