Noranwoosan Gongje Raises Customer Interest Rates and Lowers Loan Interest Rates
Base interest rate raised from 2.1% to 2.2%, loan interest rate cut by 0.1%p
[Asia Economy Reporter Kim Jong-hwa] The Korea Federation of SMEs announced on the 10th that it has raised the benchmark interest rate for the Small Business and Small Merchant Mutual Aid (Noran Usan) starting from the 1st of this month and lowered the loan interest rate to strengthen support for small businesses and small merchants struggling due to the prolonged COVID-19 pandemic.
The Small Business and Small Merchant Mutual Aid (Noran Usan) is a mutual aid system for business owners to prepare retirement funds (lump sums), managed and supervised by the government (Ministry of SMEs and Startups) under the Small and Medium Enterprise Cooperative Act, and operated by the Korea Federation of SMEs.
The benchmark interest rate, which serves as the basis for interest accumulation on contributions when paying mutual aid funds such as in cases of business closure or death, was raised by 0.1 percentage points from 2.1% to 2.2% starting January 2021, while the loan interest rate was lowered by 0.1 percentage points from 2.9% to 2.8%.
The retirement (retirement) mutual aid interest rate was 2.1% until the fourth quarter of last year but will be raised to 2.2% from the first quarter of this year. The business closure (death) mutual aid interest rate was raised from 2.4% to 2.5%, and the loan interest rate was lowered from 2.9% to 2.8% by 0.1 percentage points.
The Korea Federation of SMEs estimated that with the adjustment of the benchmark and loan interest rates decided quarterly, approximately 1.4 million subscribers will have an additional interest accumulation of 3.8 billion KRW in the first quarter of this year, and about 160,000 Noran Usan loan borrowers will benefit from an 800 million KRW reduction in loan interest.
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Park Yong-man, head of the Mutual Aid Business Division at the Korea Federation of SMEs, said, "We hope that the increase in the benchmark interest rate and the decrease in the loan interest rate will help alleviate the difficulties of small businesses and small merchants even a little," adding, "We will continue to strengthen support such as lowering loan interest rates to overcome COVID-19 and stabilize the management of small businesses and small merchants."
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