Smile Microcredit Bank (SMB), a recently launched government-led microfinance program also known as “Miso Microcredit Foundation,” has reportedly approved only a small number of applicants due to what have been termed stringent credit rules and requirements.
Under the SMB umbrella, major private companies have begun to open their “own” locations of SMB.[3] Facing increasing criticism, Kim Seung-Yu, chairman of Smile Microcredit Bank (SMB), recently acknowledged this issue in his statement, “I know that there are many complaints about the regulations. We will consider changing standards for the loans at the end of next month.” The difficulty posed by regulation was previously reported.[2] Some of the requirements are that business owners must have operated their businesses for a minimum of two years.[2] Also, individuals who have applied to personal debt rescheduling programs are excluded from qualifying. Analysts state that without modifying such rules, the government-initiated microcredit financing will do little to help those in the low-income bracket. According to the Financial Services Commission (FSC), one third of the total applicants who have applied for microloans through this program have met the first credit requirement. To date, only twenty of these applicants have been extended microloans valued at KRW 98 million (USD 87,333).
About Smile Microcredit Bank (SMB):
Established in December 2009, the Smile Microcredit Bank (SMB) is a state-led program which provides unsecured loans to low-income households through partnerships with the private sector. Under SMB program, conglomerates and commercial banks plan to open 50 microcredit banks across the nation by late May. SMB website unavailable.
About Financial Services Commission (FSC):
Established in January 2008, the Financial Services Commission (FSC) was established for the purpose of centralizing the regulation of Korea’s financial markets. FSC’s responsibilities include promoting a sound credit system and fair business practices. To this end, the FSC serves as a consolidated policy-making body for all matters pertaining to supervision of the financial industry as a whole. FSC website: http://www.fsc.go.kr/eng/
Bibliography:
SMB: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Smile+Microcredit+Bank+%28SMB%29
FSC: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Financial+Services+Commission+%28FSC%29
Additional Resources:
[1] Original article: http://www.koreatimes.co.kr/www/news/biz/2010/01/123_59182.html
[2] Related article: “MICROCAPITAL BRIEF: Critics Accuse Smile Microcredit Foundation of Heavy-Handed Regulation Stifling Access to Microfinance in Korea,” written by Jay Kumar, published by microcapital.org (December 30, 2009) located at: https://www.microcapital.org/microcapital-brief-critics-accuse-smile-microcredit-foundation-of-heavy-handed-regulation-stifling-access-to-microfinance-in-korea/
[3] Related article: “MICROCAPITAL BRIEF: Conglomerates Enter the Microfinance Industry in South Korea Via the Government-Inspired Miso (Smile) Microcredit Foundation,” written by Jay Kumar, published by microcapital.org (January 6, 2010) located at: https://www.microcapital.org/microcapital-brief-conglomerates-enter-the-microfinance-industry-in-south-korea-via-the-government-inspired-miso-smile-microcredit-foundation/
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