Saehimang Holssi Loan Limit Raised to 35 Million KRW... 1.2209 Trillion KRW Supplied in First Half of Year

Loan Limit for Sae Hope Holssi Increased by 5 Million Won from 30 Million Won in October
Loan Demand Decreased by About 32% Year-on-Year Due to Interest Rate Hikes and Economic Slowdown

[Asia Economy Reporter Song Hwajeong] To alleviate financial difficulties for low-income households, the loan limit for the Saehopeulssi program will be increased by 5 million KRW from the previous 30 million KRW to 35 million KRW in October.

On the 19th, the Financial Supervisory Service (FSS) announced that to broadly support low-income households facing economic hardships due to recent interest rate hikes and economic downturns, the per-person loan limit for Saehopeulssi will be increased by 5 million KRW to ensure more sufficient funding supply to the low-income sector.

The loan limit increase is scheduled to be implemented in October after operational regulations, amendment procedures, and bank IT system developments are completed. Banks are also implementing measures to expand supply, such as lowering Saehopeulssi interest rates and increasing the weighting of key performance indicators (KPIs).

According to the FSS, 14 domestic banks (excluding Industrial Bank, Export-Import Bank, Citibank, K Bank, Kakao Bank, and Toss Bank) supplied 1.2209 trillion KRW (67,730 people) to low-income households through the representative autonomous product Saehopeulssi in the first half of this year. This is a decrease compared to 1.8 trillion KRW in the same period last year and represents 34.4% of this year’s target of 3.5 trillion KRW.

The FSS explained, "Due to interest rate hikes and economic downturns in the first half, demand for household credit loans and Saehopeulssi loans both decreased. However, banks have continued efforts to supply funds to low-income households through non-face-to-face marketing, resulting in a more moderate decline in Saehopeulssi loans compared to household credit loans." Household credit loans decreased by 55.8% year-on-year in the first half, while Saehopeulssi loans fell by 31.9%.

The decrease in Saehopeulssi loans was also influenced by banks supplying funds to low-income households through various channels, such as expanding loans for low-to-medium credit borrowers via new internet-only banks and launching new policy financial products for low-income households. The amount supplied by internet-only banks to the same customer group as Saehopeulssi (annual income below 35 million KRW or annual income below 45 million KRW with a personal credit score in the bottom 20%) expanded from 2.6 trillion KRW last year to 3.4 trillion KRW in the first half of this year. In July last year, policy financial products targeting borrowers with similar eligibility to Saehopeulssi, such as the Sunshine Loan Bank and Safety Net Loan II, were launched.

Looking at the bank-by-bank performance of Saehopeulssi, Kookmin Bank supplied 252.7 billion KRW, followed by Nonghyup Bank (239.2 billion KRW), Hana Bank (189.9 billion KRW), Shinhan Bank (150.8 billion KRW), and Woori Bank (143.3 billion KRW). These top five banks (975.9 billion KRW) accounted for 79.9% of the total supply.

The average interest rate for new Saehopeulssi loans in the first half of this year was 7.2%, with a delinquency rate of 1.4%. Despite the base interest rate hike, the average interest rate for Saehopeulssi loans rose by 1.5 percentage points compared to the same period last year, which was lower than the 2.1 percentage point increase in average household credit loan interest rates during the same period. The FSS explained, "Despite the base rate increase, relatively low-interest funds were stably supplied to borrowers with low income and credit scores who are disadvantaged in terms of limits and interest rates."

An FSS official stated, "We will continue to actively work to resolve financial difficulties faced by low-income households due to COVID-19, economic downturns, and interest rate hikes."

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