To expand the supply of mid-rate loans, the financial authorities will exclude up to 80% of private mid-rate loans handled by financial institutions from the total volume regulation on household loans. They will increase supply of Saeidol loans, a mid-rate product, to mid-credit borrowers and also launch a Saeidol loan dedicated to small business owners.
Through this, an additional 630 billion won in Saeidol loans will be supplied this year, and interest rates will be lowered by up to 5.2 percentage points.
The Financial Services Commission held the fourth Inclusive Finance Grand Transformation meeting at the KB Hope Finance Center in Dongjak-gu, Seoul, on the 27th and discussed plans to revitalize mid-rate loans.
Lee Eog-weon, chair of the Financial Services Commission, who presided over the meeting, said, "Amid a recently challenging economic situation, the burden on the public is growing, and this impact appears to be even greater on mid-credit borrowers," adding, "The government has prepared plans to revitalize mid-rate loans to supply more mid-rate loans at lower interest rates."
To boost private mid-rate loans, the Financial Services Commission (FSC) decided to exclude up to 80% of private mid-rate loans when calculating financial companies' performance in managing the total volume of household loans. This follows concerns that strict lending regulations by the financial authorities could shrink private mid-rate loans.
The eligibility requirements for supplying Saeidol loans, a private mid-rate loan product, will be improved to expand funding for mid-credit borrowers (credit grades 4–7). Saeidol is an unsecured loan product created by the government and the banking sector, designed to allow borrowing at mid-rates (annual 6–10%) through guarantees from Seoul Guarantee Insurance Company.
Currently, more than 70% of Saeidol loans must be supplied to the bottom 50% by credit. The Financial Services Commission (FSC) explained that although Saeidol was introduced for mid-credit borrowers, it is mostly being supplied to low-credit borrowers. According to the FSC, 41.3% of Saeidol loans from 2022 to 2025 went to low-credit borrowers.
The FSC will improve Saeidol's eligible supply criteria to require that more than 70% be supplied to those in the 20–50% lower credit tier, thereby increasing funding for mid-credit borrowers. With the system improvement, the FSC projected about 100 billion won in additional Saeidol loans for mid-credit borrowers.
A Saeidol loan exclusively for sole proprietors, tentatively named "Boss Saeidol," will also be newly established. The limit will be up to 30 million won (provisional), with an annual supply of 150 billion won.
Card and capital companies will also be allowed to offer Saeidol loans. Currently, only banks, mutual finance institutions, and savings banks handle Saeidol loans. The Financial Services Commission (FSC) said participation by specialized credit finance companies could add up to 500 billion won in Saeidol loans annually.
The interest-rate requirement for private mid-rate loans will also be lowered. When calculating private mid-rate loan rates, deposit insurance premiums will be excluded from loan costs. As a result, as of the third quarter of this year, the expected rate requirement is estimated to fall by up to 1.25 percentage points depending on the sector.
To expand incentives for private mid-rate loans, mid-rate loans in secondary financial institutions will be split into categories 1 and 2. Loans supplied at rates at least 3 percentage points lower than the current requirement will be classified as Mid-rate Loan 1 and receive incentives. For example, if a savings bank handles many Mid-rate Loan 1 products, restrictions on the ratio of credit within its business area for those loans will be eased.
With these system improvements, the FSC projected that Saeidol loans this year will reach 3.62 trillion won (an increase of 630 billion won), and private mid-rate loans will reach 28.3 trillion won (an increase of 500 billion won). It also expects rate cuts of up to 5.2 percentage points for Saeidol loans and up to 1.25 percentage points for private mid-rate loans.
The FSC will pre-disclose the mid-rate loan supply targets for the financial sector and make disclosure items more specific, including average rates and balances and supply amounts by credit decile.