Chairman Lee Eog-weon of the Financial Services Commission presided over the first meeting on propelling a transition to inclusive finance with officials from related public organizations, five major financial holding groups, and private sector experts on January 8. At today’s meeting, officials discussed ways to boost financial inclusion going forward through joint efforts from the public and private sectors.

A Summary of Remarks by FSC Chairman

Following the inauguration of the new administration, emergency assistance measures were provided in the form of New Leap Fund (a long-term debt restructuring program for small merchants and vulnerable debtors) and credit recovery support, which helped to lay the foundation to facilitate a recovery in people’s livelihoods. Building upon this, it is now necessary to propel a transition to inclusive finance, which will help to address more deep-rooted problems facing financially neglected groups, long-term delinquent debtors, and those struggling with excessive debt collection practices. To pursue a sweeping overhaul in finance to make financial services more inclusive, the FSC will focus on the following three policy tasks—(a) improving financial access and reducing financial cost burden, (b) providing support for vulnerable groups to help them quickly recover and regain footing, and (c) strengthening financial safety nets.

First, to improve financial access and reduce the burden of financing cost, the government and the banking sector will work together to expand the supply of microloan support. The interest rate on a policy-based microloan product (“Sunshine Loan”) has been already lowered from January this year, and there will be an announcement made in the first quarter for the introduction of various low-interest microloan programs made available for financially neglected and socially vulnerable groups. To promote a spread of inclusive finance in private financial institutions, the supply of the microloan product in the banking sector intended for low-income earners and low-credit borrowers will be expanded to KRW6.0 trillion by 2028 from the previous level of KRW4.0 trillion in 2025. Along this line, to promote banks to make more active efforts in inclusive finance, the government will establish an incentive structure through evaluations whereby each bank’s microfinance contribution amount is determined based on its performance on inclusive finance.

Second, the government and the financial sector will assist vulnerable debtors to quickly recover and regain footing and make efforts to stamp out long-term and excessive debt collection practices. While encouraging private financial companies to more widely make available their own debt workout programs for borrowers, the FSC plans to come up with measures to more effectively manage delinquent debts in the financial sector and discuss these plans at the second meeting. Additionally, the FSC will pursue regulatory reforms sought to upgrade rules on debt collection businesses to make sure that only the qualified entities can engage in debt collection practices.

Third, to help strengthen financial safety nets, the government will pursue measures to quickly cut off and stamp out illegal private lending activities and deter criminal activities. Since plans to establish a one-stop assistance program for victims of illegal private lending was introduced in December last year, the government will continuously work to make sure a seamless implementation of the program and seek improvements along the way.

Since it is important to have mutual understanding and close collaboration among all participants, the FSC will continue to have close communication with various stakeholders. With regard to the three key policy tasks for pursuing inclusive finance, the FSC will set up a taskforce on each policy task area to seek detailed measures and follow up with implementation. Further details of the three key policy tasks will be announced in subsequent meetings.

* Please refer to the attached PDF for details.