소액생계비대출 대상The Financial Services Commission announced that starting in September, it will allow refinancing of small-sum living expenses loans only for those who repay faithfully. Previously, small-sum living expenses loans could only be used once in a lifetime, but starting in September, the system has been improved so that borrowers who have repaid both the principal and interest can receive loans regardless of the number of times. The basic interest rate for small-sum living expenses loans is 15.9% per annum, but borrowers who have completed financial education and repaid interest faithfully will be subject to 9.4% when refinancing, which has also eased the burden.
The small-sum living expenses loan is a policy product that the Korea Inclusive Finance Agency launched on March 27 last year to lend up to 1 million won to those with a credit score in the bottom 20% or lower and an annual income of 35 million won or less, with donations from financial companies. It is a product designed to absorb the loan demand of vulnerable groups who are easily exposed to illegal private finance into policy small-sum living expenses finance.
The Financial Services Commission also plans to strengthen debt adjustment for users of small-sum living expenses loans. Small-sum living expenses loans can be extended for up to 5 years, but even if the conditions for extension are not met, if it is determined that the borrower has the ability to repay the interest, the extension will be possible on the condition of paying a portion of the principal and interest. Currently, extension of the maturity is supported only for those who are ▲not in arrears, ▲have a cumulative number of overdue days of 60 days or less, and ▲have received debt adjustment counseling in the case of delinquent borrowers from financial institutions.
In addition, a credit and debt consulting program will be established for delinquent borrowers of small-sum living expenses loans. The Integrated Support Center for Small Business Finance will expand face-to-face education for small-sum living expenses loan users, and counseling staff will provide one-on-one education from the loan application stage. In addition, employment support systems and welfare systems will be introduced to improve the borrower’s ability to repay.
Since the launch of small-sum living expenses loans last year, 182,655,000 people have received support worth 140.3 billion won over the past 1 year and 2 months until the end of May this year. The average loan amount per case was 570,000 won, and 79.9% of all borrowers borrowed small amounts of 500,000 won or less, and 92.7% were in the bottom 10% of personal credit scores. By age, those in their 20s and 30s accounted for 43.6%, and by occupation, other occupations such as daily workers, unemployed, students, and special employment workers accounted for 69.1%. According to the Financial Services Commission, the delinquency rate for small-sum living expenses loans soared from 8% in September and 11.7% in December last year to 20.8% as of the end of May this year. The Financial Services Commission explains that small-sum living expenses loans are targeted at borrowers who are delinquent on loans from financial institutions or borrowers with weak repayment capabilities such as low-income and low-credit borrowers, so the delinquency rate is bound to be higher. Kim So-young, Vice Chairman of the Financial Services Commission, emphasized, “Considering that credit supply to ordinary citizens and self-employed individuals with weak repayment capacity is further reduced in the event of a crisis such as the COVID-19 pandemic, this policy microfinance should play an even greater role.”
Reporter Choi So-im sichoi@nongmin.com
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