Inclusive finance policies are aimed at providing financial support to the most vulnerable and marginalized groups to help them gain new opportunities and get back on their feet, thereby creating a virtuous cycle between financial inclusion and economic growth. A variety of government-sponsored microloan products are available for low-income individuals and those with unfavorable credit records. In addition, debt adjustment programs are available for delinquent debtors, offering an extended payment period, amortization, interest rate reduction and debt reduction. Consumer protection is a key area of inclusive finance policies. In this regard, the new legislation on financial consumer protection passed at the National Assembly in March 2020 aims to protect consumers from misselling and other unfair sales practices of financial companies while strengthening consumer rights and empowering consumers to make informed decisions about their investment and asset management.
-
Jul 20, 2010
- "Sunshine Loans" for Low-Income Households
- 1. BackgroundIn the wake of global financial crisis, low-income households have become more in need of loans; however, loans for them have become less available as financial institutions for low- income households have been more concentrated on equity investment and project financing. As a result, low-income households have been increasingly relying on private lenders and credit business providers, thus facing the burden of paying higher interests.Moreover, as the Bank of Korea (BOK) recently raised the base interest rate, if it leads to arise in market interest rates, low-income household would bear higher burden of inter st payment.(1) Starting from the end of July, approximately KRW 10 trillion will be extended over the next five years through the “Sunshine Loan” program by financial institutions* for low- income households.*The National Agricultural Cooperative Federation, the National Federation of Fisheries Cooperatives, the National Credit Union Federation of Korea, the Korean Federation of Community Credit Cooperatives, and mutual savings banks(2) The loans will be extended to individuals whose credit rating ranges from level 6 to level 10 or small business owners whose annual income is less than KRW 20 million.(3) Interest rates will be set by each financial institution but with a ceiling* in place.*As of July 20, the interest rate ceiling is 10.6% for financial cooperatives, 13.1 % for mutual savings banks. The ceiling may be adjusted depending on changes in funding costs of one-year maturity term deposits.(4) The Sunshine loan program aims to help low-income households start up business (up to KRW 50 million), provide operating capital for business (up to KRW 20 million), or support urgently needed living expenses (up to KRW 10 million).(5) Assuming that each individual makes a KRW 10 million loan, one million people are expected to benefit from the Sunshine loan program over the next five years. The Sunshine loan program will reduce the low-income ho
-
Apr 15, 2010
-
Sep 17, 2009
- Expanded Microcredit for Low-Income Households
- Following the 31st Emergency Economic Meeting, the government revealed its “Miso Credit Foundation” (previously named the Microfinance Foundation) plan to provide extensive support in microcredit loans to low-income households, which will be enforced in December.The Foundation is expected to provide KRW 2 trillion over the next 10 years, in excess of 13 times the previous amount over the last 10 years, made possible through contributions from the private sector exercising their corporate social responsibility.The Miso Credit Foundation plans to open 20 to 30 branches at the first stage and expand up to 300 nationwide branches to carry out operation in order to maximize accessibility. The branches will be independently incorporated and operated, receiving operational guidelines, consulting and education from the main office.The branches will be staffed mostly by volunteers, including the branch managers, which will be non-paid positions given to ex-financiers and retirees. The regular employees will be paid less than KRW 1 million a month, and student volunteers will be paid a minimum for their daily allowances. The funding support structure for the branches will be flexible and determined according to the regular examination of their performances.In terms of funding the Foundation, the member corporations of the Federation of Korean Industries have committed to donating up to KRW 1 trillion over the next 10 years. The other KRW 1 trillion will be contributed by financial institutions, including the KRW 700 billion withdrawn from dormant accounts currently managed by the Microfinance Foundation, KRW 200 billion initially and KRW 50 billion annually over the next 10 years.The target beneficiaries will include petty business owners, traditional market business owners, viable startup franchise store owners, regular startup businesses, startup partnership businesses, and verified non-profit organizations.The interest rates will be set below the prime rate, currently
-
Apr 08, 2009
- Pre-Workout Program
- The Credit Counseling and Recovery Service (CCRS) is a nonprofit corporation aiming to support debtors in financial difficulties and regulated by the Financial Services Commission.Starting on April 13 for a limited duration of one year, the CCRS and creditor institutions will run a “Pre-Workout Program” in support of individual borrowers who are delinquent for a short term between one and three months. This plan was first announced in March 10 this year.The main objective of this initiative is to take preemptive steps against further increase in as well as protraction of household delinquents, posing a threat to hurt asset soundness of creditor financial institutions.To be qualified for the program, there are six criteria which applicants must satisfy, and they include the total debt amount limit by two creditors (under KRW 500 million), delinquency length (between 30 and 90 days), and the ratio of new credit to total existing debts (30% maximum), among others.Meanwhile, to prevent credit delinquents from taking advantage of this program by intentionally putting off repayments, the CCRS and financial institutions will soon unveil additional provisions.For further details, interested users can call (1600-5500) or email CCRC (www.ccrs.or.kr) directly.* Please refer to the attached PDF for details.
-
Feb 18, 2009
