The Financial Services Commission will announce an inclusive finance evaluation system for financial companies this month and plans to launch a pilot program for the five major financial holding groups (KB, Shinhan, Hana, Woori, NongHyup). During the pilot period, the evaluation will focus on qualitative indicators, such as whether the chief inclusive finance officer (CIFO) of the holding group wields real influence in the board's management strategy-setting process.
According to the financial authorities on the 11th, the Financial Services Commission (FSC) will examine during the pilot evaluation period whether substantial authority is granted to the holding groups' CIFO. It plans to check whether strategies presented by the CIFO to the board were reflected in actual management, and whether the organization under the CIFO has sufficient size and structure to push inclusive finance strategies. As quantitative indicators in the inclusive finance evaluation system, it will review the supply performance of policy-oriented loans, such as policy microfinance and mid-rate loans.
The Financial Services Commission (FSC) judged that qualitative evaluation criteria that are hard to quantify require consultation with the financial holding groups subject to evaluation, and decided to conduct a pilot evaluation centered on qualitative indicators through the end of the year. After synthesizing the opinions of the holding groups, it will finalize the evaluation criteria and begin full implementation next year.
During the pilot period, penalties will be waived even if evaluation scores are insufficient. When formal evaluations begin, incentives and penalties will be applied differentially by distinguishing between financial companies with strong inclusive finance performance and those that lag. Excellent banks will have their contribution rate to the Korea INclusive Finance Agency (KINFA) lowered, while banks with weak performance will see their contribution rate raised, increasing their burden of contributions.
The inclusive finance evaluation system was devised to institutionalize inclusive finance in the financial sector. This follows continued criticism that financial companies structurally avoid supplying funds to mid- to low-credit borrowers due to expense burdens and prudential management. An official at the Financial Services Commission (FSC) said, "We plan to finalize the qualitative evaluation criteria of the inclusive finance evaluation system after this year's pilot operation."