Korea: Microfinance Loans May Triple this Year

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Jun 2010
Seul, Korea, June, 16 2010 - Microfinance loans in Korea may triple this year as the government seeks to share the benefits of economic recovery with all social classes, said Kwon Hyouk Se, vice chairman of the Financial Services Commission.

Samsung Group, Hyundai Motor Group and other businesses and banks have committed 2 trillion won ($1.6 billion) over 10 years to provide microfinance loans, Kwon said Tuesday in an interview in Seoul.

Korea is using microfinance loans to ensure self- employed people earning low incomes can secure funds to run their businesses if they are unable to borrow through traditional channels, he said. A state-backed microfinance initiative that began in December has already generated 91 billion won in loans, according to Kwon.

“We expect the loan growth to double or triple over the next six months and for Korea to have the world’s largest microfinance program by next year,” he said. “The program allows companies and banks, the first beneficiaries of an economic recovery, to share their benefits with the less fortunate.”

Self-employed people account for almost a quarter of working Koreans, according to data from the nation’s statistics office. President Lee Myung Bak has made improving the livelihood of low-income earners one of his top priorities and Korea plans to raise the need for bolstering microfinance globally when it hosts the Group of 20 Nations summit in November, Kwon said.

Microfinance loans in Korea are available to individuals with assets of less than 135 million won ($110,000) if they reside in major cities, and less than 85 million won in provincial areas, according to the website of the Smile Microcredit Bank, which oversees the program.

Individuals can borrow up to 50 million won at interest rates below 4.5 percent, and have as long as five years to repay the debt, according to the website.

“This very important issue has been overshadowed by the imminent need to stabilize the financial system,” Kwon said. “Over the next two to three years, governments around the world will come under political pressure to address a widening income gap, a typical post-crisis phenomenon.”

Microfinance gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank.

Korea’s program, which runs on contributions from companies and banks, provides a model for providing microfinance without placing a burden on state coffers, Kwon said.

Asia’s fourth-largest economy expanded by a larger-than- estimated 2.1 percent in the first three months of the year. The expansion will remain on track with a growth of 5.8 percent this year and 4.7 percent in 2011, the Organization for Economic Cooperation and Development said. Samsung Group, Hyundai Motor Group and other businesses and banks have committed 2 trillion won ($1.6 billion) over 10 years to provide microfinance loans, Kwon said Tuesday in an interview in Seoul.

Korea is using microfinance loans to ensure self- employed people earning low incomes can secure funds to run their businesses if they are unable to borrow through traditional channels, he said. A state-backed microfinance initiative that began in December has already generated 91 billion won in loans, according to Kwon.

“We expect the loan growth to double or triple over the next six months and for Korea to have the world’s largest microfinance program by next year,” he said. “The program allows companies and banks, the first beneficiaries of an economic recovery, to share their benefits with the less fortunate.”

Self-employed people account for almost a quarter of working Koreans, according to data from the nation’s statistics office. President Lee Myung Bak has made improving the livelihood of low-income earners one of his top priorities and Korea plans to raise the need for bolstering microfinance globally when it hosts the Group of 20 Nations summit in November, Kwon said.

Microfinance loans in Korea are available to individuals with assets of less than 135 million won ($110,000) if they reside in major cities, and less than 85 million won in provincial areas, according to the website of the Smile Microcredit Bank, which oversees the program.

Individuals can borrow up to 50 million won at interest rates below 4.5 percent, and have as long as five years to repay the debt, according to the website.

“This very important issue has been overshadowed by the imminent need to stabilize the financial system,” Kwon said. “Over the next two to three years, governments around the world will come under political pressure to address a widening income gap, a typical post-crisis phenomenon.”

Microfinance gained prominence globally when Muhammad Yunus won the Nobel Peace Prize in 2006 for his role in founding Bangladesh’s Grameen Bank.

Korea’s program, which runs on contributions from companies and banks, provides a model for providing microfinance without placing a burden on state coffers, Kwon said.

Asia’s fourth-largest economy expanded by a larger-than- estimated 2.1 percent in the first three months of the year. The expansion will remain on track with a growth of 5.8 percent this year and 4.7 percent in 2011, the Organization for Economic Cooperation and Development said. (Bloomberg)

Source : The Korea Herald
 

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