South Korea's financial authorities are addressing the practice of excluding low-credit and credit-inexperienced individuals from the financial system. The initiative aims to redesign credit evaluations, financial company incentives, debt adjustments, and data utilization from an inclusive finance perspective, rather than merely increasing policy-based financial products.
On June 17, the Financial Services Commission (FSC) held an "Inclusive Finance Forum" in Seoul, chaired by Chairman Lee Ok-yeon.
In his opening remarks, Lee stated, "Inclusive finance is not a one-time measure for people's livelihoods but a structural reform task for the financial system. We need to examine why citizens turn away from the threshold of institutional finance and why a single default leads to long-term delinquency."
He emphasized that "inclusive finance does not weaken the principles of finance. It is not about avoiding risks at all costs but about more accurately assessing recovery potential and establishing a structure to make adjustments before problems escalate." He added, "If all financial companies only choose safe customers, it will create a funding gap in the entire financial system. We need to rewrite the rules of finance to make inclusion a rational choice rather than avoidance."
The forum discussed the public role of finance, the direction of financial policies for the underprivileged, and strategies for the inclusive redesign of the financial industry. Presenters suggested that financial institutions should consider both profitability and public service, ensuring that low-credit and credit-inexperienced individuals have opportunities within institutional finance if they show potential for recovery.
Particularly, the need to reform the credit evaluation system was a major topic. Participants argued for the necessity of identifying "good borrowers" by reflecting not only existing financial history but also current behavior and future repayment capabilities, which the institutional finance sector has overlooked. They proposed that policy-based financial support should not merely be about providing loans but should create pathways for responsible repayment histories to lead to credit recovery and access to institutional finance.
The FSC plans to incorporate the feedback from this forum into discussions for its inclusive finance strategy task force. The task force will operate in four divisions: overall policy, policy-based finance, financial industry, and credit infrastructure, with its first meeting scheduled for later this month to finalize specific tasks and timelines. Completed proposals will be presented at the "Inclusive Finance Transformation Meeting" for policy implementation.
* This article has been translated by AI.
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