Social Finance Supply in the Public Sector Reaches 101 Billion KRW by Q1 End... "20% Achieved"

The 1st Social Finance Council Meeting Held

[Asia Economy Reporter Park Sun-mi] As of the end of the first quarter of this year, the scale of funding supplied to social economy enterprises (social enterprises, cooperatives, village enterprises, self-support enterprises, etc.) in the public sector was 101 billion KRW, which is 20% of this year’s supply target.

The Financial Services Commission held the 1st Social Finance Council on the 21st to review the first quarter social finance promotion performance and discuss future plans.

The social finance supply performance in the public sector as of the end of March was 547 companies and 101 billion KRW. This represents 20% execution against the annual supply target of 516.2 billion KRW. In the loan sector, 20.9 billion KRW was supplied to 209 companies (about 140 million KRW per company), achieving 17% of the target (170 billion KRW). In the guarantee sector, guarantees worth 63.5 billion KRW (about 200 million KRW per company) were provided to 325 companies, achieving 25% of the target (250 billion KRW). In the investment sector, 8.1 billion KRW (about 620 million KRW per company) was invested in 13 companies, achieving 8% of the target (96.2 billion KRW).

Performance data for social economy enterprises in the banking sector was also disclosed. As of the end of last year, the outstanding loan balance to social economy enterprises by banks was 1.1213 trillion KRW, a 31.95% increase from 849.8 billion KRW at the end of 2019. This increase was mainly due to the rise in outstanding loans to social enterprises (251.5 billion KRW). By enterprise type, social enterprises accounted for 881 billion KRW (78.6%), cooperatives 213.8 billion KRW (19.1%), village enterprises 20.9 billion KRW (1.9%), and self-support enterprises 5.7 billion KRW (0.5%). By bank, KEB Hana Bank (310.2 billion KRW, 27.7%), Shinhan Bank (225.7 billion KRW, 20.1%), and Woori Bank (136.7 billion KRW, 12.2%) accounted for more than half of the total performance (672.6 billion KRW, 60.0%).

In addition to loans, banks provided support through donations and sponsorships (15.59 billion KRW, 75.6%) and product purchases (3.44 billion KRW, 16.7%). Kookmin Bank (10.63 billion KRW, 51.6%), Hana Bank (2.36 billion KRW, 11.4%), and Woori Bank (1.45 billion KRW, 7.1%) were the top contributors.

Status and Plans for Social Finance Promotion by Institution

The financial authorities are promoting the expansion of institutions using the social economy enterprise evaluation system to facilitate the spread of social value across the economy and society and to make it easier for social economy enterprises to secure funding.

After developing and releasing the social economy enterprise evaluation system, 13 briefing sessions were held last year for social finance institutions such as public institutions, credit unions, and public interest foundations. As a result, as of the end of March, 16 social finance institutions including credit unions, the Small Enterprise and Market Service, and the Sustainable Development Center have joined and are using the system to evaluate 83 enterprises. The plan is to strengthen promotion and education activities for related social economy organizations and general financial institutions and to enhance the objectivity and reliability of the evaluation system through a systematic feedback system among operating institutions.

Measures to complement social finance activation plans by each institution are also underway. First, various measures such as holding investment briefings will be pursued to improve social finance accessibility for social economy enterprises outside the metropolitan area.

The Korea Inclusive Finance Agency will conduct a full survey of non-profit corporations to discover social finance intermediary institutions outside the metropolitan area and review ways to strengthen support. Korea Growth Investment Corporation will hold investment briefings targeting social economy enterprises outside the metropolitan area and consider providing incentives to asset management companies when investing in these enterprises. The Small and Medium Business Corporation will strengthen support for excellent social economy enterprises based on local industries. It will also enhance the social finance role of region-based mutual finance institutions (credit unions, Saemaul Geumgo, agricultural and fisheries cooperatives) and upgrade the Korea Inclusive Finance Agency’s 'Social Finance at a Glance' service into a social finance information platform to improve information accessibility for enterprises outside the metropolitan area.

Efforts to increase the success potential of social economy enterprises will also be added.

The Ministry of SMEs and Startups is promoting R&D support for social enterprises that have succeeded in crowdfunding platforms, and the Social Enterprise Promotion Agency is preparing a social finance-linked consulting program to strengthen social enterprises’ funding and fund management capabilities. Led by the Korea Credit Guarantee Fund, the expansion of guarantee limits for excellent social economy enterprises (from 100 million to 300 million KRW → 300 million to 500 million KRW) and the increase of investment limits for excellent cooperatives (from 3 times to 5 times the investment amount) will also be implemented in the second half of the year.

A Financial Services Commission official said, "We will continue to promote the activation of social finance through the operation of the Social Finance Council. To this end, we plan to review the status of fund supply and discuss necessary institutional improvements with participating institutions in the council."

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