The Korea Inclusive Finance Agency has asked Hanwha Group to establish a microfinance foundation that would extend low-interest loans to vulnerable borrowers. The agency also plans to ask SK Group and LG Group for additional contributions to expand the supply of inclusive finance.
"We have delivered a proposal to Hanwha to set up a microfinance foundation," Kim Eun-kyung, president of the agency, said at a news conference at its offices in Jung-gu, central Seoul, on the 18th. "Hanwha is one of the top five groups, but it has no microfinance foundation so far." Kim plans to meet Hanwha officials next week to formally request the foundation's establishment. The five largest financial holding companies, along with Samsung, SK and LG groups, each run their own microfinance foundations that supply loan products for low-income borrowers.
The agency is understood to have tailored its proposal to Hanwha's business profile, with ideas likely aimed at the defense industry and its workers.
For SK and LG, the agency intends to seek additional funding. "SK is earning large profits from the artificial intelligence business," Kim said. "Because the spread of AI could create problems for youth employment, we are focusing on microfinance targeted at young adults." She added that the agency also plans to communicate with LG.
On the possibility of relocating the agency outside the capital region, Kim was cautious, saying the distribution of vulnerable borrowers must be taken into account. "You might think that vulnerable groups and users of inclusive finance are concentrated in the provinces, but because making a living is centered in Seoul, they are clustered in the capital region," she said. "We have to think about their access." She added that the final decision is beyond her authority.
Kim also said she would continue pushing to create a new body by merging the agency with the Credit Counseling and Recovery Service. The plan is included in a bill on basic financial guarantees for the public that she is pursuing with the ruling party. Kim said the bill does not separately specify the location of the new body's headquarters. "I hope the bill passes within this year," she said. "This should not drag on."
The agency is also seeking cooperation with online platform operators such as NAVER. It has asked them to give priority exposure to the agency and the Credit Counseling and Recovery Service when users search for loan products, in order to protect vulnerable borrowers from illegal private lending and phishing scams. The agency is also building an AI-based counseling system for vulnerable groups, which it says will diagnose weaknesses in a borrower's credit profile and quickly link them to employment and welfare services.
