Financial Services Commission Launches 'Inclusive Finance Promotion Task Force'... Will Credit Evaluation and Mid-Interest Rate Loans Be Overhauled?

Public Debate on the Public Role of Finance Begins in Earnest
Financial Services Commission to Launch Inclusive Finance Promotion Task Force This Month
Discussion on the 'Public Role of Finance' Emphasized by President Lee

The Financial Services Commission is set to launch the “Inclusive Finance Promotion Task Force” this month, formally beginning discussions on strengthening the public role of finance as emphasized by President Lee Jaemyung. The task force is expected to broadly discuss policy initiatives related to finance, including the overhaul of the credit evaluation system, expansion of mid-interest rate loans, and redefinition of the roles of financial institutions serving low-income groups.

According to financial authorities on May 10, the Financial Services Commission is currently working to hold a kickoff meeting for the Inclusive Finance Promotion Task Force within the month. The task force’s subcommittees and agenda items are currently being coordinated. The task force is expected to become a large-scale organization with the simultaneous participation of multiple departments, such as the Financial Policy Bureau, the Financial Industry Bureau, and the Financial Consumer Bureau.

This task force is largely a follow-up measure in response to the Presidential Office’s recent focus on the public nature of finance and concerns over financial exclusion. On May 6, President Lee Jaemyung remarked at a cabinet meeting, “I feel that the public nature of financial institutions is far too weak.” Policy chief Kim Yongbeom also criticized the current system on Facebook, stating, “Why do those with the greatest financial means enjoy the lowest interest rates, while those in the most desperate situations pay the highest?” He pointed out that the current financial system structurally excludes people with mid- to low credit ratings.

In particular, Kim expressed strong criticism of the current credit evaluation method, saying, “How long will we keep focusing only on past delinquency records and card histories?” He described the credit rating system as “an invisible badge of class designed by finance.”

Accordingly, the task force is expected to focus heavily on reforming the credit evaluation system.

The reduction in the supply of mid-interest rate loans is also expected to be a major topic of discussion. According to the Financial Services Commission, the size of mid-interest rate loan supply by banks, savings banks, mutual finance companies, and specialized credit finance companies last year was 27.81 trillion won, a decrease of 3.1 trillion won compared to the previous year. It is analyzed that the loan market for mid- to low-credit borrowers has contracted as the financial sector has strengthened its focus on soundness management.

There are also growing concerns that internet-only banks are drifting away from their founding purpose of “expanding loans to mid- and low-credit borrowers.” As a result, discussions are also expected to take place on redefining the policy roles and functions of not only internet banks but also savings banks, mutual finance companies, and other secondary financial institutions.

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