Bank Livelihood Self-Regulation Program Launched... 600 Billion KRW for About 1.67 Million People

The banking sector is set to fully launch a voluntary program for livelihood financial support worth approximately 600 billion KRW. Through this program, about 1.67 million young people, financially vulnerable groups, small business owners, and small enterprises are expected to receive financial benefits.

Former Shinhan Financial Group Chairman Cho Yong-byoung has been selected as the final candidate for the next chairman of the Korea Federation of Banks. The photo was taken on the 16th at the Korea Federation of Banks building in Jung-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

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The Korea Federation of Banks announced on the 27th that it has finalized and will begin full implementation of a voluntary program execution plan worth 597.1 billion KRW as part of the livelihood financial support measures announced last December. Participating banks with remaining funds include KB Kookmin, Shinhan, Hana, Woori, NH Nonghyup, IBK Industrial Bank, sh Suhyup, SC First Bank, Korea Citibank, Gwangju, Daegu, KakaoBank, as well as the Korea Development Bank, Export-Import Bank of Korea, and Toss Bank.

The voluntary program utilizes the remaining amount of the banking sector’s total livelihood financial support of 2.1 trillion KRW, excluding the interest refund support for self-employed and small business owners (1.5 trillion KRW). To this end, the banking sector has been discussing the detailed contents of the voluntary program through a working task force (TF) for about two months since last month.

First, to enhance linkage with the government’s livelihood financial policies, a total of 237.2 billion KRW will be invested in contributions to the Korea Inclusive Finance Agency and support for low-interest refinancing programs. Nine banks will contribute 221.4 billion KRW to the Korea Inclusive Finance Agency to help stabilize the supply system of inclusive finance and strengthen support for vulnerable groups. Additionally, with the expansion of the low-interest refinancing program since the 18th, 15.8 billion KRW will be provided to cover the necessary funds.

Approximately 420,000 small business owners and small enterprises will receive a total of 191.9 billion KRW in support. Major items include not only the previous interest cashback method (10 billion KRW) but also guarantee fee support (36.1 billion KRW), business site improvement support (35.9 billion KRW), expense support such as electricity and communication fees (32.9 billion KRW), management improvement support (1 billion KRW), special agreement guarantee support (42.3 billion KRW), and loan principal and interest reduction (33.7 billion KRW).

Furthermore, a total of 168 billion KRW will be provided to young people and financially vulnerable groups. First, about 260,000 young people will receive 66 billion KRW. This includes support for young entrepreneurs’ funding (11.4 billion KRW), student loan support (31.9 billion KRW), education support (1 billion KRW), housing and living stability (13.2 billion KRW), and measures to alleviate low birth rates (8.5 billion KRW).

About 860,000 financially vulnerable people, including low-income groups, will receive 87.9 billion KRW. This will be directly used to stabilize livelihoods through interest and guarantee fee cashback (44.8 billion KRW), living stabilization funds support (12.7 billion KRW), financial cost support (12.2 billion KRW), principal and interest reduction (9.7 billion KRW), and voice phishing prevention support (1 billion KRW). Additionally, for vulnerable groups facing crises such as delinquency and personal rehabilitation, 7.5 billion KRW will be allocated for credit recovery support including loan repayment and legal aid. Moreover, the banking sector will provide 14.1 billion KRW to 130,000 vulnerable groups such as the elderly, multicultural families, and farmers and fishermen.

Separately, the Korea Development Bank and Export-Import Bank of Korea will provide interest benefits worth about 83 billion KRW (49.6 billion KRW from Korea Development Bank and 33.4 billion KRW from Export-Import Bank) within the year through expanded operation of interest rate reduction programs for small and medium enterprises. Toss Bank, which was excluded from livelihood financial support due to a net loss last year, will voluntarily prepare and implement a separate easy refund program.

This voluntary program consists of separate support plans individually prepared by each bank. The Korea Federation of Banks stated, "The voluntary program is basically aimed to be completed within this year," and added, "To ensure effective execution, each bank’s execution performance will be regularly disclosed at the end of the month following each quarter."

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