Shinhan Bank said on the 29th it will roll out a "virtuous-cycle inclusive finance program" from late January next year that lets borrowers use part of their loan interest to repay principal.
The program targets low-credit sole proprietor loan borrowers who hold won-denominated loans with interest rates above 5% a year. Of the portion exceeding 5% interest per year, up to 4 percentage points of interest will be applied to repaying the loan principal. If the loan is deferred, it will be applied automatically without a separate application. However, some industries, such as real estate leasing and supply, and borrowers with a history of arrears are excluded.
It will also help low-credit customers using high-interest household unsecured loans switch their existing loans to long-term loans with a single annual rate of 6.9%.
A Shinhan Bank official said the bank "focused on directly lowering interest burdens for high-interest, low-credit customers while reducing total liabilities, laying the groundwork for long-term credit recovery and a fresh start."