Finance minister backs low-cost lending as IBK adds 100 billion won to microfinance

Deputy Prime Minister and Finance Minister Lee Hyung-il said Thursday that the government will launch a low-interest, long-term, small-sum loan program in 2027 to widen credit access for borrowers shut out of the formal banking system, as he visited a financial support center in Gwangjin District, Seoul, to hear directly from users and counselors.

The program, which the finance ministry calls a livelihood protection loan, will offer rates of 4.5 percent over terms of 10 years, with individual loans capped at 1 million won ($749). Lee said the aim is to reach vulnerable borrowers who struggle to obtain bank credit at all.

"Financial support for ordinary people must serve as a breathing hole that lets them hold on one more time, and as a stepping stone that lets them get back on their feet," Lee said during the visit, explaining the thinking behind the loan's low rate, long maturity and small size.

The visit to the integrated financial support center, which houses both policy lending and debt adjustment services, was the third in a series of on-site trips tied to the government's three core social policies of jobs, housing and household finance. Lee previously visited a youth employment academy on Oct. 12 and a housing welfare complex in Yeongdeungpo on Oct. 23.

Lee took a seat at a counseling desk himself, acting as a one-day financial counselor to hear visitors' money problems and point them toward suitable products. He thanked staff for handling difficult cases, saying the counter is the first place people at the end of their rope turn to.

At a meeting with loan users and counselors that followed, Lee said the government is preparing further measures to ease interest burdens, open a path to recovery through aggressive debt restructuring for those who cannot repay, and strengthen incentives for borrowers who repay on schedule. It also plans to keep expanding combined support that links financial help with employment and welfare services so that people in need can receive everything in a single visit.

The IBK Miso Finance Foundation said at the meeting that it shared plans to expand inclusive finance, and IBK Industrial Bank of Korea said it will contribute up to an additional 100 billion won ($74.9 million) to microfinance. The pledges bring the total announced so far for microfinance by the five major financial holding companies, Samsung and IBK to 800 billion won ($599 million). Lee praised companies and financial institutions for their efforts to expand lending to low-income households and said he hopes the push spreads further.