[2020 National Audit] Hetsalron17, Subrogation Rate Increased by 3.4% Within One Year of Launch

Assemblyman Hong Seong-guk "Government's Careful Consideration Needed to Support the Lives of Vulnerable Groups"

[Asia Economy Reporter Kangwook Cho] The subrogation repayment rate of the low-income financial product, Haetsalron17, has been rapidly increasing within one year of its launch. Haetsalron17 is a loan product handled by commercial banks, with a 100% guarantee provided by the Korea Inclusive Finance Agency for workers, small business owners, freelancers, and farmers/fishers who inevitably face high-interest loans.

According to data submitted by the Korea Inclusive Finance Agency to Hong Seong-guk, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, the subrogation repayment rate of Haetsalron17, launched in September last year, rose to 3.4% as of the end of September this year. Within one year of its launch, the total guaranteed amount exceeded 1 trillion won. The subrogation repayment rate refers to the ratio of the subrogation amount requested by the lending institution (such as banks) to the guaranteeing institution among all loans, which is a different concept from the bank's delinquency rate. In the case of Haetsalron17, if delinquency continues up to the 4th installment, the bank can request subrogation repayment.

Considering that Haetsalron17 has only been launched for one year and that principal repayment deferral has been applied since April 29 under the 'Strengthened Support Measures for Vulnerable Individual Debtors' announced last April, there are concerns that the rise in Haetsalron17's subrogation repayment rate requires careful attention.

Haetsalron17 provides credit guarantees for financially vulnerable groups with low annual income and credit ratings who inevitably face loans with interest rates above 20%, such as from private lenders, making it more vulnerable to economic downturns compared to general household loans.

Assemblyman Hong said, "While some parts of society are feverishly trading houses and stocks taking advantage of low interest rates, others are struggling to repay 14 million won borrowed at an interest rate of 17.9%," emphasizing that "it is time for the government to provide meticulous care to support the lives of vulnerable groups."

This content was produced with the assistance of AI translation services.