MICROCAPITAL BRIEF: South Korean Financial Services Commission (FSC) Announces Stricter Lending Criteria for Sunshine Loans from Microfinance Institution Smile Microcredit Bank

The South Korean government recently announced the installment of stricter lending criteria for its “Sunshine” loans in order to decrease loan defaults. Sunshine loans are an offering under Smile Microcredit Bank, a state-run microfinance program established in 2009 to provide unsecured loans to low-income households through partnerships with the private sector. Korea’s Financial Services Commission (FSC), established in January 2008 to centralize the regulation of Korea’s financial markets, announced that it will “change credit evaluations to determine the size of the loans that [will] be granted to different classes of borrowers.” Lending criteria will reportedly be changed to take into account the credit rating and income level of borrowers [1].

By Julia Korn, Research Associate

About Smile Microcredit Bank:

Established in December 2008, the Smile Microcredit Bank (SMB) is a South Korean state-led program that provides unsecured loans to low-income households through partnerships with the private sector. As of April 2010, SMB’s 38 total branches had lent KRW 7 billion (USD 5.9 million) to 953 borrowers.

About Financial Services Commission:

The Financial Services Commission (FSC), established in January 2008, was created 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. FSC serves as a consolidated policy-making body for all matters pertaining to supervision of the financial industry.

Sources and Additional Resources:

[1] Jooang Ang Daily. “Borrowing Criteria Tighten: FSC Wants Default Risk Reduced for Microcredit Loans” by Jung Jae-Yoon on August 19, 2010.

MICROCAPITAL BRIEF: South Korean Government Launches Sunshine Microfinance Loan Program under Smile Microcredit Bank for Low-income Households by Conner Brannen on August 2, 2010: https://www.microcapital.org/microcapital-brief-south-korean-government-launches-sunshine-microfinance-loan-program-under-smile-microcredit-bank-for-low-income-households/

MICROCAPITAL BRIEF: Critics Accuse Smile Microcredit Foundation of Heavy-Handed Regulation, Stifling Access to Microfinance in Korea by Jay Kumar on December 30, 2009. https://www.microcapital.org/microcapital-brief-critics-accuse-smile-microcredit-foundation-of-heavy-handed-regulation-stifling-access-to-microfinance-in-korea/

MICROCAPITAL BRIEF: South Korea Unification Ministry, Smile Microcredit Bank to Provide Microfinance Loans to North Korean Refugees, July 14, 2010: https://www.microcapital.org/microcapital-brief-south-korea-unification-ministry-smile-microcredit-bank-to-provide-microfinance-loans-to-north-korean-refugees/

MICROCAPITAL BRIEF: South Korean Smile Microcredit Bank (SMB) Successfully Lobbies for Regulation Changes and Alters Loan Practices, May 21, 2010: https://www.microcapital.org/microcapital-brief-south-korean-smile-microcredit-bank-smb-successfully-lobbies-for-regulation-changes-and-alters-loan-practices/

MICROCAPITAL BRIEF: Conglomerates Enter the Microfinance Industry in South Korea Via the Government-Inspired Miso (Smile) Microcredit Foundation, January 6, 2010: https://www.microcapital.org/microcapital-brief-conglomerates-enter-the-microfinance-industry-in-south-korea-via-the-government-inspired-miso-smile-microcredit-foundation/

MicroCapital Universe: Smile Microcredit Bank: https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Smile+Microcredit+Bank+%28SMB%29

MicroCapital Universe. Financial Services Commission (FSC). https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Financial+Services+Commission+%28FSC%29

Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/

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