SC First Bank, which provided 100 billion won in loans to sellers on Timon and Wemef, will soon begin the partitioning repayment process. SC First Bank is in discussions with financial authorities about a plan to return part of the interest to sellers based on their repayment deadlines. Additionally, SC First Bank has proposed a scheme that reduces part of the principal if the borrower repays the loan in full before the partitioning repayment period.
According to the financial sector on the 11th, SC First Bank has prepared four options for the partitioning repayment deadline for Timon and Wemef's advance loan: 3, 5, 7, and 10 years. It is also reviewing a plan for interest refunds according to the repayment deadline. According to this plan, a borrower who chooses 3-year partitioning repayment will receive a refund of all interest paid every three months during the first year of repayment. This means that, effectively, for the first year, they will receive a 100% refund of the interest paid to the bank in four installments.
Borrowers who choose a 5-year term will receive a refund of 70% of the interest paid in the first year. The refund period for interest will be the same as that for the 1-year repayment, occurring every three months. Borrowers who choose a 7 or 10-year term will receive a one-time refund of 100% of the interest paid during the first three months.
In addition, SC First Bank has prepared support measures for borrowers who intend to repay the loan before the partitioning repayment begins. SC First Bank plans to return 10% of the principal only to borrowers who repay the entire loan before the partitioning repayment starts in January next year. Furthermore, even if only part of the loan is repaid, they have confirmed a plan to additionally reduce 10% of the paid amount during the partitioning repayment period.
SC First Bank recently reported the borrower support plan containing these details to the Financial Services Commission. A spokesperson for SC First Bank noted, 'We are guiding borrowers to choose a partitioning repayment period in line with their repayment capacity and sharing relevant information with financial authorities.'
Previously, SC First Bank operated a revenue-based advance loan product using credit card sales as collateral for sellers on Timon, Timon World, and Wemef. This type of advance loan involves borrowing money secured by credit card sales receivables. After credit card sales occur, it takes about 2 to 3 months for Timon and Wemef to settle the payment (the credit card sales receivable) with the sellers, during which the sellers borrow from the bank and repay the loan once the funds are received from Timon and Wemef.
Since July, a massive unsettled payment crisis has arisen on Timon and Wemef, leading to a drop in the repayment ability of sellers. Sellers have found it difficult to repay the loans as Timon and Wemef have not disbursed payments to them. Furthermore, with sales channels through Timon and Wemef effectively closing, sellers' revenues plummeted, worsening their ability to repay.
As a result, SC First Bank has consulted with financial authorities to extend the maturity of principal and interest repayments for advance loan borrowers twice. The first extension of three months was implemented from August to November, during which no interest was additionally charged. A second extension is underway from November to January next year, during which interest is being charged. However, interest paid by the borrower during the second extension period for two months will be reduced from the principal and interest of the partitioning repayment.
Starting in January next year, SC First Bank will commence the partitioning repayment of principal and interest for advance loans. Borrowers will need to repay the principal in installments over the period they choose and will also need to pay interest based on the remaining loan balance. The annual interest rate applied to the partitioning repayment is reported to be at approximately 5%. According to information submitted by the Financial Supervisory Service to the National Assembly's Political Affairs Committee, the balance of SC First Bank's advance loans stands at 102.6 billion won.