What is a confronting financial challenge experienced by low-income, low-credit, or financially vulnerable individuals? They are various issues to be addressed, but one of the most commonly recognized one is ‘no access to formal financial services.’
Needless to say, it is very difficult for those individuals to apply for personal loans at banks. Usually they find an alternative from illegal private institutions. Of course, there is a consequence of high interest rate payment, which causes a vicious cycle of financial difficulties.
Fighting against this cycle and supporting those households in need of formal access to financial services, lots of microfinance measures have been implemented so far in Korea. Microfinance measures are designed with consideration for applicants’ personal needs and financial status. Various loans are available for different purposes, at an affordable interest rate.
This concern over ‘limited access to formal financial services’ led IFC to work on microfinance. Microcredit is considered a critical tool in the fight against poverty, which has entered the financial mainstream. The emphasis on access to financial services is given, as financial services are powerful instruments to empower individuals. They provide grounds to build financial capabilities, while reducing financial vulnerabilities.
IFC plans to ‘scale up access to a range of high quality financial services for under-deserved populations, maximizing development impact and ensuring institutional stability.’ This aim is carried out by IFC’s combination of investment with advisory services to a range of financial intermediaries. Working with more than 100 institutions in over 60 countries, IFC strives to have development impact through microfinance. Let us look forward to hearing lots of good news about microfinance around the world!