Policy Financial Services to Supply 11.8 Trillion Won This Year
Around 60% to Be Supplied Early in the First Half
Mid-Interest Rate Loans Expanded from 33 Trillion to 36.8 Trillion Won
Internet Banks to Boost Lending to Middle- and Low-Credit Borrowers
'Hetsalron 119' Launched for Faithful Repayors of Business Loans
The government will expand the supply of mid-interest rate loans to 36.8 trillion won this year for middle- and low-credit borrowers facing a 'money drought.' This is about a 10% increase compared to last year. A new program called 'Hetsalron 119,' which provides funds to individuals who have faithfully repaid personal business loans, will also be launched.
Support for policy financial services for low-income and vulnerable groups will increase by 1 trillion won from last year to 11.8 trillion won. The plan is to supply around 60% of major policy financial products such as Worker Hetsalron and Special Guarantee for Lowest Credit Borrowers early in the first half of the year.
On the 27th, the Financial Services Commission held a household debt inspection meeting with related ministries including the Bank of Korea, Ministry of Economy and Finance, Ministry of Land, Infrastructure and Transport, and Financial Supervisory Service, confirming these policies.
Resolving the 'Money Drought' for Middle- and Low-Credit Borrowers... Expanding Private Loans to Needed Groups
First, to prevent a cliff in private mid-interest rate loans, part of private mid-interest rate loans will be excluded from the loan amount when calculating the loan-to-deposit ratio this year. The plan is to include some private mid-interest rate loans in the exclusion category to promote mid-interest rate lending.
Last year, savings banks and mutual finance sectors limited the loan-to-deposit ratio to within 100% to prevent excessive loan expansion and strengthen soundness. While Hetsalron and Saeitdol loans are excluded from the loan amount when calculating the loan-to-deposit ratio, there was no separate incentive for private mid-interest rate loans.
The supply requirements for the mid-interest rate guaranteed loan product 'Saeitdol Loan,' supported through Seoul Guarantee Insurance, will also be relaxed. Currently, more than 70% of Saeitdol Loan funds are supplied to the bottom 30% by credit score. The borrower target range will be expanded to increase funding for middle- and low-credit borrowers.
Loans for middle- and low-credit borrowers will also be activated through internet-only banks. Previously, the target proportion of credit loans for middle- and low-credit borrowers was maintained at 'an average balance of 30% or more,' but from this year, a 'newly originated amount of 30% or more' standard has been added. This prevents arbitrary reduction of loans to middle- and low-credit borrowers below a certain level due to economic downturns.
For banks, the entire amount of loans to middle- and low-credit borrowers will be reflected in the 'Community Reinvestment Act' evaluation. There will be no interest rate cap requirement, and evaluation will be based only on the bottom 50% by credit score. Currently, only Saehope Hope Loan is included in the performance of policy financial services for low-income groups.
Policy Financial Services Expanded by 1 Trillion Won Compared to Last Year... Tailored Support for Vulnerable Groups
The Financial Services Commission set this year's target for policy financial services at 11.8 trillion won, an increase of 1 trillion won from last year. The Korea Inclusive Finance Agency (KIFA) will handle 7.3 trillion won. Banks and regional credit guarantee foundations will manage 4.2 trillion won through Saehope Hope Loan and 300 billion won through Business Hetsalron.
They plan to supply about 60% of major policy financial products such as Worker Hetsalron, Hetsalron 15, and Special Guarantee for Lowest Credit Borrowers early in the first half of the year.
In particular, tailored support for vulnerable groups will be strengthened. The supply scale of Business Hetsalron for low-income and low-credit self-employed individuals will be expanded from 150 billion won to 300 billion won. Of this, 100 billion won will be operated as a special guarantee offering preferential treatment on guarantee fees and interest rates.
For vulnerable groups such as micro-business owners, the repayment deferral application period for policy financial services will be extended by one year until the end of this year. The supply scale of Hetsalron Youth for young people will increase from 200 billion won to 300 billion won. Through Hetsalron Youth, funds will be provided at a low interest rate of 2% to socially disadvantaged youth.
A notable point this year is the product exclusively for faithful repayors. The bridge loan (with an interest rate within 9% and a limit of 30 million won) has been completely revamped to allow faithful repayors of policy financial services to use bank credit loans.
Those recommended by KIFA after strengthening the repayment ability assessment and verification can receive benefits. The government plans to build a dedicated platform within 'Seomin Finance Itda' to supply funds one-stop from qualification to loan application for the support targets.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
