The pilot program for a specialized credit evaluation system (SCB) for small businesses, which utilizes non-financial data such as sales, market conditions, and industry type, will expand from 7 to 16 participating banks.
On July 27, the Financial Services Commission (FSC) held a meeting of the 'Inclusive Finance Strategy Promotion Team' and the 7th Credit Evaluation System Reform Task Force (TF) to review the progress of the SCB, which was announced in April.
The SCB model evaluates the future growth potential of small businesses by analyzing non-financial data through artificial intelligence (AI), in contrast to traditional credit evaluations that focus on financial history. Businesses rated with high growth potential will receive a higher credit rating than their existing personal credit scores, increasing their chances of loan approval and providing benefits such as lower interest rates and higher loan limits.
Initially, seven banks, including KB Kookmin, Shinhan, Woori, Hana, NH Nonghyup, and Jeju Bank, were set to participate. However, with the addition of K-Bank, Kakao Bank, Toss Bank, and several regional banks, the total number of participating banks has increased to 16. The SCB will be applied to a total of 2.2 trillion won in loans for individual businesses, with pilot operations set to begin sequentially from the end of August, depending on each bank's readiness.
The FSC also plans to expand the application of the SCB. A new loan program for individual businesses, scheduled for release in October, will utilize growth ratings to offer interest rate benefits. Starting next year, the SCB will also be applied to guarantee reviews by regional credit guarantee foundations. To facilitate active use by banks, related supervisory regulations and credit review guidelines will be revised in August.
Shin Jin-chang, the FSC's Secretary General, stated, "The SCB, which reflects the future growth potential of small businesses in credit evaluations using AI, represents a paradigm shift in finance that embodies both inclusivity and innovation. We will continue to enhance the system to ensure it spreads beyond the banking sector to the entire financial industry."
During the meeting, the possibility of shortening the public information registration period for personal bankruptcy and discharge cases (currently five years) was also discussed. While there were opinions supporting the need for quick recovery assistance, concerns were raised about the need for careful consideration, as bankruptcy and discharge involve complete debt forgiveness, unlike personal rehabilitation. The FSC plans to continue discussions to balance the swift recovery support for debtors with the prevention of moral hazard.
* This article has been translated by AI.
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