FSC to unveil inclusive finance evaluation system next month, with emphasis on lending and recovery support

[Financial News] The Financial Services Commission (FSC) will unveil next month a comprehensive evaluation system for banks' inclusive finance performance. The assessment will apply to all banks, including commercial banks, regional banks and internet-only banks, on a relative basis. Financial authorities plan to give more than 60% of the weight to financial support for vulnerable borrowers and recovery assistance.
According to financial authorities on the 30th, the FSC is considering having Chairman Lee Eok-won personally announce the 'Comprehensive Evaluation System for Inclusive Finance Performance in the Banking Sector' at next month's Inclusive Finance Transformation Meeting.
The main indicators in the evaluation system will consist of four categories: financial support for vulnerable borrowers, recovery support such as debt restructuring, governance, and non-financial services such as credit counseling and financial education.
The most important item is lending support. Authorities will focus on the share and volume of loans extended to low-credit and low-income borrowers, including Saehuimangholssi Loans, policy-based inclusive finance, and mid-rate loans, within total household lending.
Debt restructuring and recovery support measures for borrowers who fall behind on loan payments will also be key evaluation items. Under measures to strengthen delinquent loan management, banks' sales of delinquent loans and debt restructuring performance will also be included in the assessment.
In the governance category, financial authorities plan to assess both qualitatively and quantitatively whether banks have embedded inclusive finance into their governance structures. The review will go beyond simply appointing a chief inclusive finance officer and will examine how performance is evaluated and whether the role is fully reflected in the accountability structure. A financial authorities official said, "We will first review the performance data and then look for improvement measures through qualitative evaluation."
The FSC is also discussing improvements to the exemption system to help expand inclusive finance. The goal is to allow financial institutions to pursue such policies without regulatory burdens, even if they incur a certain level of losses or complaints while supporting vulnerable borrowers or expanding policy finance.
Reflecting President Lee Jae Myung's push to make inclusive finance mandatory for banks, the FSC has decided to divide banks into five grades based on performance and apply incentives and penalties accordingly. Strong performers will receive lower contribution rates for the Korea Inclusive Finance Agency, while banks that are penalized will have to pay more.
The contribution rate for payments made by financial institutions to the Korea Inclusive Finance Agency was raised to 0.1% in April. This year's total contributions are expected to reach about 381.8 billion won, up 134.5 billion won from last year. Depending on the inclusive finance evaluation, each bank's annual contribution could vary by hundreds of millions of won, likely intensifying competition over inclusive finance performance.
However, it has not yet been decided whether rankings for all banks, other than the top performers, will be made public. A financial authorities official said, "We have decided to disclose the top-performing banks, but we need more discussion on whether to also release the names of banks that receive penalties."


[email protected] Park So-hyun Reporter