A pilot assessment of the "win-win finance index," which evaluates how well financial companies support small and midsize businesses and microbusiness owners, will begin in the second half of this year.
The Korea Commission for Corporate Partnership said on the 24th that it approved the "plan to launch a pilot assessment of the win-win finance index" at its 88th meeting on the 16th and decided to conduct the pilot together with the Financial Services Commission and the Financial Supervisory Service.
The win-win finance index is a system created under the revised win-win cooperation act in November last year. Its core is to quantify the index by comprehensively assessing financial companies' win-win cooperation activities and how small and midsize businesses and microbusiness owners perceive them. It is the first case of expanding the Shared Growth Index evaluation framework, which had focused on manufacturing, to the financial sector.
The pilot will first cover six commercial banks with a high share of lending to small and midsize businesses. The banks are KB Kookmin Bank, Industrial Bank of Korea (IBK), NongHyup Bank, Shinhan Bank, Woori Bank, and Hana Bank.
Banks were included as targets because they account for a large share of funding for small and midsize businesses and microbusiness owners. With few systems in place to objectively measure financial companies' win-win efforts, calls have continued to strengthen the financial sector's social role.
Assessment items consist of win-win finance performance evaluation (40 points), win-win cooperation performance evaluation (40 points), and a perception survey of small and midsize businesses and microbusiness owners (20 points). Points will be deducted if there are violations of financial laws or social controversies.
The Financial Supervisory Service will handle the win-win finance performance evaluation. Key items include the scale of loans to small and midsize businesses and sole proprietors, as well as unsecured credit, technology finance, relationship banking, community reinvestment, social solidarity finance, and debt adjustment performance. The evaluation also looks at how much nonfinancial factors such as technological capability and growth potential are reflected, going beyond collateral-centered lending practices.
Support performance such as debt-to-equity swaps, principal and interest reductions, and debt adjustment for low-credit borrowers or corporations facing business difficulties will also be reflected. The aim is to examine efforts to support financially vulnerable groups rather than simply the size of lending.
The Korea Commission for Corporate Partnership will conduct the win-win cooperation performance evaluation. It will assess how much financial companies contribute to the growth of small and midsize businesses and the competitiveness of microbusiness owners by using their infrastructure and networks. Evaluation items include establishing win-win finance governance, building a foundation for win-win cooperation, supporting an AI transition, responding to the climate crisis, nurturing innovative corporations and supporting scale-ups, supporting fair trade and technology protection, promoting balanced regional development, and fulfilling social responsibility.
User evaluations will also be reflected. The perception survey will focus on the lending rate and fee levels, the extent of nonfinancial assessments used, satisfaction with debt adjustment support, and the effectiveness of nonfinancial support programs.
The process of building the assessment system involved the government, the financial sector, and business groups. Since February, a task force of related agencies has operated with the Ministry of SMEs and Startups, the Financial Services Commission, the Financial Supervisory Service, the Korea Commission for Corporate Partnership, the Korea Federation of Banks, the Korea Federation of Small and Medium Enterprises, and the Korea Federation of Micro Enterprise (KFME), while the banks subject to evaluation also joined the discussions to improve the effectiveness and acceptance of the indicators.
The Korea Commission for Corporate Partnership plans to refine the assessment system based on the pilot results and review whether to expand the scope of application. The industry expects that if the win-win finance index takes hold, competition among banks to support small and midsize businesses and microbusiness owners will become even more active.