Sunshine Loan Card Available for Those Earning Over 6 Million Won Annually with No Delinquencies
Postpaid Transportation via Debit Card Allowed Even During Debt Restructuring
Applications Open from the 20th...Up to 34,000 Beneficiaries Expected
From as early as the 20th of this month, sole proprietors whose credit scores fall in the bottom 50% will be able to receive credit cards. Low-credit financial consumers who are in the process of repaying their debts will also be able to use public transportation with debit cards, as long as they have no delinquencies.
Kwon Daeyoung, Vice Chairman of the Financial Services Commission, is seen speaking at the Productive Finance Council for the Financial Industry held at the Government Complex Seoul in Jongno-gu, Seoul on the 21st of last month. Photo by Yonhap News
The Financial Services Commission announced that on the 9th, it held a meeting with the card industry, presided over by Kwon Daeyoung, vice chairman of the Financial Services Commission, to discuss the preparation status and launch schedule of the "Card Products to Support the Comeback of Mid- to Low-Credit Borrowers."
First, the Financial Services Commission decided to issue the "Sole Proprietor Sunshine Loan Card" to sole proprietors whose credit scores are in the bottom 50%, based on guarantees provided by the Korea Inclusive Finance Agency. Eligible recipients are sole proprietors who currently have no delinquencies and have an annual disposable income of at least 6 million won. Even if they are undergoing debt restructuring, they can receive a Sunshine Loan Card if they have faithfully made repayments for at least six months. They can choose to have the card issued by any of Lotte Card, Shinhan Card, Samsung Card, Hyundai Card, Hana Card, Woori Card, KB Kookmin Card, or Nonghyup Card.
The monthly usage limit is set at between 3 million won and 5 million won. Installment payments are allowed for up to six months, but card loans such as cash advances and card loans, as well as revolving payments and payment deferral functions, cannot be used. Overseas payments and payments at unhealthy businesses such as entertainment and gambling establishments are restricted.
The Sole Proprietor Sunshine Loan Card is a product based on guarantees from the Korea Inclusive Finance Agency and will be supplied in a total amount of 100 billion won. To this end, nine card companies will contribute 20 billion won. From the 20th of this month, guarantee applications for the product can be submitted through the Korea Inclusive Finance Agency, and the Financial Services Commission expects that approximately 25,000 to 34,000 sole proprietors will benefit. The Financial Services Commission expects that this product will allow sole proprietors to continue their business activities without relying on high-interest loans, even when they face temporary liquidity shortages.
The Financial Services Commission also decided that low-credit financial consumers who are undergoing debt restructuring but have no delinquencies will be allowed to use postpaid transportation services with debit cards, regardless of their credit scores. Previously, if debt restructuring information remained on record, they could not use credit services from private financial institutions.
The initial monthly limit for postpaid transportation is set at 100,000 won, and if card bills are repaid without delinquency, it can be increased to a maximum of 300,000 won. Afterward, following the card company’s credit evaluation, general payments beyond public transportation will also be allowed. However, if any delinquency occurs at a financial company while using the postpaid transportation service, or if negative public information such as tax arrears is registered, the postpaid transportation service will be immediately suspended.
The Financial Services Commission expects that the postpaid transportation card for comeback support will improve the convenience of using essential public transportation during the process of implementing debt restructuring, thereby facilitating smooth economic activity, and that it will also help restore credit scores by allowing users to steadily accumulate a history of small repayments.
Postpaid transportation cards for low-credit borrowers can be applied for from the 23rd of next month through seven card companies - Lotte Card, Shinhan Card, Samsung Card, Hyundai Card, Hana Card, Woori Card, and KB Kookmin Card - and nine banks (including their card businesses): Gyeongnam Bank, Gwangju Bank, Nonghyup Bank, Busan Bank, Suhyup Bank, Jeonbuk Bank, Jeju Bank, IBK Industrial Bank of Korea, and iM Bank. After the product is launched, the card industry plans to review operational progress such as the scale of issuance and delinquency trends, and to gradually establish detailed criteria related to increasing the postpaid transportation limit.
The Financial Services Commission estimates that approximately 328,000 people who are faithfully implementing debt restructuring without any delinquencies or arrears will be able to use this service.
Vice Chairman Kwon said, "Small business owners endured the COVID-19 period by relying on loans, and afterward they suffered from both high interest rates and weak consumption," adding, "Supporting their comeback will also help card companies in the long term in terms of merchant fee revenue and expanding their membership base."
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