Source: The Korea Times.
Original article available here.
SEOUL, May 21 – The head of the Korea Federation of Savings Banks (KFSB) said Tuesday the organization is encouraging Korean savings banks to share their experience and practices with members of the World Savings Bank Institute (WSBI) to boost mutual cooperation.
“To develop trade and cooperation among member banks beyond just declaration and to produce mutual benefits, it is important to share best practices, as well as information and experience,” said KFSB President Kim Seok-won in an interview with The Korea Times ahead of the 14th Asia/Pacific regional group meeting of the WSBI slated for May 22-23.
“Member banks in the Asia/Pacific region should put their heads together to develop new business models and areas related to microfinance to strengthen cooperation,” he stressed.
He has called for governments and international organizations to work closely together to back up financial institutions handling microfinance, a type of banking service that is provided to unemployed or low-income individuals who would otherwise have no other means of gaining financial services.
Kim, who will host the regional meeting, said that in order to revitalize microfinance in Korea, the government has sped up its move to carry out large-scale regulation reform and systematic improvement
“Financial authorities need to provide policy support to allow microfinance institutions, including savings banks, to freely make loans to people with lower credit ratings,” he said.
“In addition, they should ease regulations related to branches to help ordinary people get easier access to such loans,” he added.
He stressed that the authorities should come up with the right vision and direction to help savings bank enjoy sustainable development in line with relaxation of regulations.
“In a move to encourage lending to people with lower credit ratings, the KFSB and member banks are working together to develop small-amount loan products, which are scheduled to debut in June,” Kim said.
He explained that the move was designed to encourage small savings banks, which are unable to set up a credit scoring system or do marketing activities on their own, to handle new-type loans, adding that the KFSB will play the key role in establishing the scoring system.
Touching on the background and significance of hosting the 14th Asia/Pacific regional meeting of the WSBI, Kim said, “This regional meeting will be a great opportunity to expand the role and function of local savings banks not only in Korea, but also globally through close cooperation with member banks of WSBI.”
He pointed out that Korea is now undergoing a large-scale regulation reform led by private sectors in line with the new government’s vision to develop a financial industry as a new growth engine.
“The gist of the regulation reform is to provide more opportunities for those unable to get access to financial services to help them restart normal economic activities,” he said.
Established in 1973, the KFSB – the central bank of savings banks – has promoted sound development of microfinance institutions, playing the intermediary role between savings banks and the financial supervisory organization.
As of July 2007, combined assets of local savings banks amounted to USD 61 billion, sharply up from USD 36 billion in 1997, with BIS capital adequacy ratio of 9.75 percent, well above 5 percent, the level instructed by the local regulator.
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