Up to 10 Million Won Long-Term Low-Interest Loans, Legal Maximum Interest Rate Within 5 Times Growth Rate... Lee Jae-myung's 'Basic Finance' Released

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] Lee Jae-myung, Governor of Gyeonggi Province, announced a ‘basic finance’ policy pledge to lend up to 10 million won at low interest rates (around 3% based on current standards) for a long term (10 to 20 years). He also stated plans to gradually lower the current legal maximum interest rate of 20% to within five times the economic growth rate.

On the 10th, Governor Lee held the ‘5th Policy Announcement (Basic Finance) Press Conference and Briefing’ to unveil the ‘basic finance’ policy. This is his fifth policy announcement following ‘Transitional Fair Growth’ on the 18th of last month, ‘Basic Income’ on the 22nd of the same month, ‘Basic Housing’ on the 3rd of this month, and ‘First Youth Policy’ on the 5th.

The core of Governor Lee’s basic finance policy is the guarantee of basic loan rights. It allows any citizen to borrow up to 10 million won for 10 to 20 years at an interest rate slightly higher than preferential rates (around 3% based on current standards). He added that measures to prevent moral hazard will be implemented through the registration and management of delinquency information.

He said, “People who cannot receive financial benefits and fall into the trap of high-interest loan businesses or illegal private loans face a high risk of becoming welfare recipients due to their inability to bear high interest rates,” adding, “The government’s welfare cost burden will inevitably increase accordingly.” He emphasized, “Strengthening basic finance and other financial services for ordinary people will provide opportunities for rehabilitation in advance, improving citizens’ lives and saving national finances.”

The current legal maximum interest rate of around 20% is planned to be maintained within five times the economic growth rate. For example, if the economic growth rate is 2%, the legal maximum interest rate will be linked to a maximum of 10%. However, if it exceeds 4% as forecasted this year (government 4.2%, Bank of Korea 4.0%), the 20% level will be maintained. Governor Lee stressed, “Illegal loan contracts that violate the Interest Restriction Act will be entirely invalidated, and crackdowns on illegal lending activities, which currently only incur small fines, will be strengthened.”

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