Financial Services Commission: "Measures to Strengthen Support for Vulnerable Self-Employed Will Be Implemented Quickly"
The expanded plan for the Sae Chulbal Fund, which aims to support the recovery of vulnerable small business owners and self-employed individuals, is scheduled to be fully implemented starting in September.
The Financial Services Commission announced that on July 14, Kwon Daeyoung, Secretary General, presided over the 'Sae Chulbal Fund Partnership Institutions Meeting' at the Government Complex Seoul in Jongno-gu, Seoul.
This meeting was a follow-up to the President's directive to listen to the voices from the field regarding personal and small business debt issues and to enhance the public’s sense of policy effectiveness. The meeting served as a venue to discuss with partner institutions the expansion plan for the Sae Chulbal Fund, which is one of the special debt adjustment packages included in the latest supplementary budget.
The Sae Chulbal Fund is a debt adjustment program established by the government to help small business owners and self-employed individuals recover. It targets vulnerable small business owners who operated their businesses from April 2020, when COVID-19 broke out, through June of this year.
The government plans to allocate 700 billion won from the second supplementary budget to expand the eligibility for the Sae Chulbal Fund. The program will now include unsecured debts of low-income small business owners whose total debt is less than 100 million won and whose income is below 60% of the median. The principal reduction rate will be increased from the previous 60-80% to 90%, and the repayment period will be extended from 10 years to 20 years.
Attendees at the meeting included three Sae Chulbal Fund counselors, the President of Korea Asset Management Corporation, the Chairman of the Credit Counseling and Recovery Service, representatives from the Korea Federation of Banks, the Korea Life Insurance Association, and the General Insurance Association of Korea. The counselors shared that, based on their consultations, there are now more self-employed individuals expressing that their difficulties are greater than during the COVID-19 period, and they shared cases where they supported debtors’ recovery.
The counselors commonly pointed out that delays in agreement execution have been a major recent complaint. One debtor, who is preparing to start a new business with help from family alongside debt adjustment, expressed hope for a swift conclusion of the debt adjustment agreement, and requested extraordinary measures to shorten the debt adjustment process.
The Korea Asset Management Corporation explained that, in order to improve the speed of agreement execution for the Sae Chulbal Fund, it is fundamentally necessary to streamline the debt adjustment process and redesign the incentive structure for creditor financial institutions. The corporation added that it is continuously working to improve system operations, including increasing staffing, to support these efforts.
The financial authorities emphasized that creditor financial institutions are in the best position to detect early signs that debtors are struggling with debt issues, and therefore requested that these institutions more actively promote and guide debtors regarding the Sae Chulbal Fund system. The system improvement measures announced through the supplementary budget, as well as the matters discussed today, will be implemented in September after working-level consultations and revisions to agreements among partner institutions.
Kwon Daeyoung, Secretary General, stated, "The system improvement measures announced through the supplementary budget will be implemented as quickly as possible so that debtors can receive benefits without delay," and urged, "Active cooperation from partner institutions, including revisions to the Sae Chulbal Fund agreement, is necessary to ensure that the related procedures proceed smoothly."
He added, "Rather than viewing debt adjustment only from the perspective of short-term losses, it is necessary to consider it in terms of consumer protection and the recovery of delinquent borrowers," and said, "Helping debtors break the vicious cycle of debt and return to a normal economic life is the path to mutual prosperity."
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