The Korea Institute of Finance published a report on the 6th titled 'Simplification of policy microfinance products and strengthening connections with private microfinance.'
The Korea Institute of Finance pointed out in the report that “currently, policy microfinance is divided into several products due to differences in the target beneficiaries, funding, institutions, and interest rates,” adding that “the excessive number of products may raise concerns about operational efficiency.”
It also analyzed that “the target and conditions of policy microfinance products are complicated, making it difficult for consumers to understand the characteristics of individual products or find suitable ones,” and that “if financial institution practitioners do not fully understand the products, they may struggle to connect customers with appropriate products.”
The Korea Institute of Finance argued that similar policy microfinance products should be consolidated to reduce the number of types. It suggested considering the consolidation of Haetsal Loan and Haetsal Loan Bank into a single product and simplifying the special guarantee for the lowest credit users.
A proposal was also made to provide incentives for diligent repayers of policy microfinance products to connect with private financial institutions. The Korea Institute of Finance emphasized that “for policy microfinance products to operate efficiently, diligent repayers must be able to graduate from policy microfinance and utilize private financial institutions.” It continued, stating that “even if they repay policy microfinance products, measures must be taken to ensure they do not remain confined to the policy microfinance market by granting regulatory relaxations and incentives to private financial institutions that supply loan products to them.”