Financial authorities have begun full-fledged discussions to resolve the financial polarization issue flagged by Deputy Minister Kim Yong-beom of the presidential office's policy office.
According to the financial authorities on the 4th, the Financial Services Commission held an executives' meeting that day chaired by Lee Eog-weon, chair of the Financial Services Commission, to discuss the issue.
On this, an official at the Financial Services Commission (FSC) said, "Nothing has been decided right away, and it was a session to brainstorm what perspective each country should take and what to discuss going forward."
The Financial Services Commission (FSC) also plans to launch a task force (TF) soon to comprehensively push related issues. The TF is expected to discuss matters including redefining the roles of financial firms, starting with the credit evaluation system, and additional measures to boost mid-rate lending.
The Financial Supervisory Service also began its own discussions, focusing on the banking and small finance institutional sectors.
An official at the Financial Supervisory Service (FSS) said, "Authorities have continued trying to build an alternative credit evaluation system to resolve the interest-rate disconnect, but even that did not solve it," adding, "Since the issue has been raised at a fundamental level, we need to take a comprehensive second look."
In addition, concrete discussions are expected to proceed through the authorities' credit evaluation system reform TF launched early this year.
Deputy Minister Kim Yong-beom recently raised the issue of financial polarization on social media (SNS). It is an extension of the problem of financial exclusion among vulnerable groups that President Lee Jae-myung described as "cruel finance."
Kim said, "They (people in difficulty) are not paying high interest rates; they are deprived of choices themselves," adding, "They are driven out without even getting a ticket to enter the market."
On the credit evaluation system, Kim criticized it as "nothing more than a finely summarized 'afterimage of the past,' yet this number becomes an absolute god," and, aiming at commercial banks, also suggested, "They should shake up the composition of their lending so they are not confined only to the greenhouse of high-credit borrowers."
Amid this, remarks by Deputy Minister Kim from his time as vice chair of the Financial Services Commission (FSC) on the social role of finance are drawing attention.
At the Summer Joint Academic Conference in Aug. 2017, Deputy Minister Kim, in a paper titled "Theoretical background of productive finance and inclusive finance and future policy directions," stressed that policy finance for low-income people that supplies funds to vulnerable groups and startups and small and midsize enterprises is needed to strengthen the social role of finance.
He added that to supplement the limited resources of policy finance, systems and incentives should be redesigned so that the social role of the private finance institutional sector is strengthened.
He said, "We must ensure that opportunities to use financial services are not restricted for low-income and low-credit individuals, and that the benefits of financial services do not concentrate on high-income and high-credit individuals."
He also said, "Legal and institutional incentives should be redesigned so that a shift in perception occurs in which social consideration—such as support for people in arrears to make a fresh start—is recognized as an important value of finance."
On the direction of an inclusive financial environment, he said, "We must be able to dramatically improve financial accessibility for medium- and low-credit individuals who do not receive medium- and low-rate benefits due to the lack of accurate credit ratings, as well as for marginal borrowers and users of high-interest loans."