Credit Counseling & Recovery Service (CCRS) Chair and Korea INclusive Finance Agency (KINFA) Governor Kim Eun-gyeong said she will launch the mid-rate loan product "financial ladder loan," with participation from secondary financial institutions. The aim is to lay a stepping-stone so that vulnerable borrowers can use first-tier financial products by restoring their credit.
Kim said at a press conference on the 100th day in office on Apr. 7, "Even if vulnerable borrowers faithfully repay their loans, it is impossible to immediately use first-tier financial products. If secondary financial institutions participate in the middle stage and serve as a ladder through mid-rate loans, it will create an opportunity for vulnerable borrowers to move into the first tier."
Korea INclusive Finance Agency (KINFA) supports the financially excluded through the "illegal private finance prevention loan." The agency is currently preparing a related product under the tentative name "financial ladder bank." Kim said, "Once the idea is fleshed out, we will discuss a launch with the Financial Services Commission."
Kim also said she is considering a merger of CCRS and KINFA. She said, "We see about 30% overlap between the work of the Credit Counseling & Recovery Service (CCRS) and the Korea INclusive Finance Agency (KINFA), and we feel the need to streamline the staffing structure. We are considering integration as one option and will review it calmly." She added, "However, I believe the overall headcount itself should be increased, and we plan to push for improvements in employees' compensation."
Kim also emphasized the need to amend the law to secure stable funding for KINFA. She said, "We expect the bill introduced to establish the people's finance stabilization fund to take effect in January next year," adding, "Before the validity period for paying financial companies' contributions is abolished, the legal amendment should also be carried out quickly." She continued, "To diversify funding sources, we are also reviewing the possibility of fund participation by other industries, such as virtual asset exchanges and the securities sector."
The currently introduced People's Finance Support Act centers on establishing the people's finance stabilization fund and reorganizing it into a statutory fund. The aim is to resolve KINFA's limitation of business scale fluctuating annually depending on whether there are government grants and to secure funds stably. Based on transitional provisions of the 2021 legal amendment, the basis for KINFA's contributions carries a "five-year validity" clause, so it will lose effect after Oct. 8 this year. If financial companies' contributions disappear, KINFA will be unable to establish long-term business plans.
Kim said, "Next year, we intend to export our livelihood finance business model to ASEAN countries such as Malaysia and the Philippines."