The Lee Myung-Bak government has launched the “Smile Microcredit Bank,” a state-led microcredit lending program designed to provide unsecured small loans to low-income earners, individual business people and people with under level-7 credit ratings.
A total of 2 trillion won (US$1.78 billion) will be funded over the next 10 years for those who lack access to traditional loans because of their low credit ratings.
* 14 branches funded by the corporate and banking sectors, 7 local branches
The Smile Microcredit Bank lends money at 4-5 percent interest rate, far lower than that of commercial banks, depending on the borrowers’ credit ratings.
[Lets look at a case]
The Microcredit Bank is expected to bring a smile to the working class people mired in economic hardships
For example, Ji, Il-Yeol is one of the lucky beneficiaries. The 47-year-old is running an unregistered shop for bedding products in Goyang, Gyeonggi Province, and applied for 5 million won to buy fabric. Woori Bank decided to lend the money to him. Ji, Il-Yeol was so glad to hear that he could get the money. Five million won sounds like a small amount, but for the people who need it is a huge amount.
-“I hope others can also benefit from the program.”-
All parts of the Korea ! 200 ~ 300 ”Smile Finance” branch. In the new program not only government but also private bank and local government will help this program and make big network across the whole country. This will allow people to easily access the program and make budget supply more diverse.
Moreover, the program will counsel people after they borrow the money on how to spend it effectively.
[volunteers & Retired Financiers]
The branches will be staffed by young volunteer workers who want to build a financial career and managed by ex-bankers in the financial industry.
As the Smile Microcredit project is still in its early stage, the government will closely monitor the operation and continue to complement the program to benefit more people in need.
For the individuals who cannot benefit from the Smile Microcredit loans due to credit delinquencies, excessive high-interest debts, the government will help them use alternative programs such as the credit recovery program or the loan transfer program.
It is hoped that many people will have a chance to stand on their feet through the help of the smile mircrocredit bank.