"Prevent Illegal Private Loans" ... Emergency Living Expenses Loan of 2 Million Won Available

Financial Services Commission Preparing Small Emergency Livelihood Loans for Vulnerable Groups
Targeting Low Credit Score 10-20% Low Credit Borrowers... Even Delinquents Can Receive Small Loans

People Power Party's Sung Il-jong, Chairman of the Policy Committee, speaking at the 'People's Livelihood Financial Inspection Party-Government Council' held at the National Assembly on the 6th. Photo by Yonhap News

[Asia Economy Culture Young Intern Reporter] As the ruling party and government plan to allow vulnerable groups facing economic hardship to borrow emergency living expenses of several million won through formal financial institutions, the government is considering a plan to provide immediate loans of 1 to 2 million won, including to those with overdue payments.

According to the financial sector on the 7th, the Financial Services Commission is preparing detailed measures for 'Emergency Small Loans for Vulnerable Groups' and plans to launch an emergency small loan product through the Korea Inclusive Finance Agency in the first quarter of next year. The loan targets will include overdue borrowers who are practically unable to obtain loans from financial institutions. A financial authority official said, "Overdue borrowers find it difficult to get loans from financial institutions and are pushed toward illegal private loans," adding, "For them, even if some bad debts occur, small loans for emergency living expenses will be provided regardless of overdue status."

The support targets under consideration are low-credit borrowers in the bottom 10-20% credit score range who cannot use formal financial services. Discussions are also underway to include vulnerable groups who are at risk of or have suffered from illegal private loans, regardless of overdue status. The plan being considered is to provide an immediate loan within 500,000 won initially, with additional loans granted upon faithful repayment, using a one-year maturity lump-sum repayment method without early repayment fees.

Meanwhile, the emergency small loan will be led by the Korea Inclusive Finance Agency and is expected to be introduced as early as this year. It is known that many opinions consider a loan limit of 2 million won appropriate. Seong Il-jong, Policy Committee Chair of the People Power Party, explained the background of the system introduction, saying, "Many people could fall into illegal private loans due to loan delinquency," and "We need to rescue those who urgently use 'phone kkang' and end up in the private loan market."

Earlier, on the 6th, the People Power Party and the government agreed on policies to expand support for financially vulnerable groups at the 'People’s Livelihood Finance Inspection Ruling Party-Government Council' held at the National Assembly. The safe conversion loan to reduce interest burden will be expanded to cover housing prices up to 900 million won starting next year, and the special lease guarantee limit for young people is expected to increase from 100 million won to 200 million won.

The government plans to increase the budget for supporting low-income finance from the original 10 trillion won to 12 trillion won to implement these policies. In addition, the government will submit the 'Personal Debtor Protection Act (Act on the Management of Personal Financial Claims and Protection of Personal Debtors)' bill to the National Assembly within this year to reduce the debt burden of individual debtors.

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