South Korea's Financial Services Commission (FSC) has outlined a transition to “inclusive finance”, setting three policy priorities aimed at improving access to finance for financially neglected groups, supporting vulnerable debtors’ recovery, and strengthening financial safety nets. Measures on access and cost include expanding microloan supply through joint work with banks, following an interest rate cut to the policy-based “Sunshine Loan” from January, and announcing additional low-interest microloan programmes in the first quarter for financially neglected and socially vulnerable groups. The FSC also plans to increase the banking sector’s microloan product supply for low-income and low-credit borrowers to KRW6.0 trillion by 2028 from KRW4.0 trillion in 2025, supported by an evaluation-based incentive structure that links each bank’s microfinance contribution amount to its inclusive finance performance. On debtor support, the FSC will encourage wider availability of private firms’ debt workout programmes, develop measures to manage delinquent debts more effectively, and pursue reforms to debt collection business rules to ensure only qualified entities can engage in collection. On safety nets, the government will pursue measures to cut off illegal private lending and implement and refine a one-stop assistance programme for victims of illegal private lending. Taskforces will be set up for each of the three policy areas to develop detailed measures and support implementation, with further details to be announced in subsequent meetings, including discussion of delinquent debt management measures at a second meeting.

Original source View in tracker