The Financial Services Commission announced that it is going to establish a control tower for comprehensive microfinance. Credit Counseling & Recovery Service and SMILE Microcredit Bank will be merged into one. Establishment, etc. Of Microfinance Foundation Act will be revised before establishment of the new foundation.
The FSC had great success on providing consumer-oriented services such as SMILE Microcredit Bank and Happiness Fund. The importance of consumer finance has grown significantly yet procedures remain complicated; one would need to move place to place in order to get different kinds of financial services and must qualify different standards. Currently each financial institution provides different standards that the applicants should be aware of. A control tower will be established and the FSC is going to make sure that financial consumers can receive all services on a one stop basis. Application process will be made faster and it will be easier to get needed information all at once.
What is Job & Welfare Center?
FSC’s director general of Consumer Finance and Protection Bureau announced to improve structures of microfinance institutions to provide services that are needed by consumers. In March 2014, the FSC founded Job and General Welfare Center in Namyangju. On June, he announced that the FSC is going to extend the number of centers to 6 other cities in Korea. Job and worker’s welfare related services were used to be provided by the Ministry of Employment and Labor Reserved, Job Center and Community Service Centers. It was hard for common people to figure out what kind of services each center can provide. Non-Bank division of the center will provide one-to-one counseling on loan conversion, startup fund, living expense loan to low-incomers and low-credited.
How the center will be established
1. A control tower will be made by merging Credit Counseling & Recovery Service with SMILE Microcredit Bank. Functions of personal guarantee and those of sunshine loan will be separately integrated.
2. Happiness Fund project will remain under Korean Asset Management Corporation(KAMCO).
3. Establishment, etc. Of Microfinance Foundation Act will be revised and new act will be prepared before establishment of the control tower. Necessary fund will be raised from KAMCO and financial companies.
4. Conditions to apply for Sunshine Loan, New Hope Pore service and microcredit-targeted products will be standardized for consumer’s convenience.
5. Conditions to apply for the products mentioned above will be simplified to ‘those who earn less than 30 million won per year or whose credit level is below 6.’
6. The guarantee rate of Sunshine Loan will be changed from 95% to 85% gradually.
7. Credit Counseling & Recovery council will be responsible for counseling on individual rehabilitation and personal bankruptcy.
8. Financial supports and other services deemed to be helpful to recover one’s financial independency (job search service or welfare counseling) will be provided.
Microfinance Support Center will be a comprehensive organization which will specifically focus on helping low-incomers and the low-credited people. Practical services to help rehabilitation of individuals such as job seeking, employment, welfare, and even financial counseling will be provided at once.