The banking sector has decided to increase the supply of microloans for vulnerable young people by approximately tenfold.
The Financial Services Commission (FSC) announced the plan at the third Inclusive Finance Transformation Meeting held on the 23rd. Banks will expand the annual supply of youth microfinance from the current 300 billion won ($220 million) level to 3 trillion won by 2028. The total microfinance supply will also double from 3 trillion won to 6 trillion won over the same period.
New loan products targeting vulnerable groups and young people living outside the Seoul metropolitan area will also be introduced. A key example is the "Youth Future Bridge Loan," which provides up to 5 million won at an annual interest rate of 4.5% for unemployed or early-career young people with credit scores in the bottom 20% or those at or below the near-poverty level. The lending cap for the "Youth Microfinance Operating Fund Loan" will also be raised from the current 20 million won to 30 million won. Approximately 10,000 young self-employed borrowers living in provincial areas who use microfinance will receive an additional interest rate reduction of about 1 percentage point. A new loan product will also be established to lend up to 5 million won to vulnerable borrowers who have faithfully repaid policy-based loans for low-income earners.