중앙데일리

Microcredit push to help poor with their businesses

Government seeks $249 million in low-interest loans this year alone  PLAY AUDIO

Sept 18,2009
The Korean government said yesterday it would form a 300 billion won ($248.7 million) microcredit lending program this year for low-income individuals searching for cash to start up or maintain their businesses and would expand the program by up to 2 trillion won over the next decade.

The Blue House and Seoul’s top financial regulator, the Financial Services Commission, said they would urge local big business groups to donate up to 100 billion won by the end of the year. The same amount was asked of financial sector companies.

The move, which the government said would benefit up to 250,000 families over the next decade, came as more cash-squeezed poor families unqualified to borrow from major banks are being forced to borrow from private lenders and loan sharks demanding high interest rates.

“The economic slowdown and increasing jobless rate among the low-income earners has fanned demand for needed financing, but they have experienced difficulty in taking out loans in major financial markets due to low credit ratings,” the commission said in a statement yesterday. “Microcredit programs to fill the gap have remained meager.”

Microcredit, the extension of very small loans to cash-strapped individuals with business plans, originated from Grameen Bank in Bangladesh, which helped many poverty-stricken people successfully build wealth.

But such loans made in Korea, arranged by 30 big and small charity groups, amounted only to about 47 billion won last year, roughly 0.005 percent of the nation’s total gross domestic product.

About 6,800 Koreans, or 0.014 percent of the population, benefitted from the little-known program, which has also received financial assistance from the Welfare Ministry and Seoul city government.

According to the plan, the government will create a new microcredit foundation whose sole job is distributing and coordinating microcredit operations based on the money donated by the companies.

Mom-and-pop store owners who need money to repair their facilities or buy raw materials will be eligible to borrow up to 10 million won with an interest rate of 2 to 3 percent - far below prevailing rates. They will have to pay back the loans within five years.

Small vendors at Korea’s traditional outdoor markets, or those hoping to open their own businesses, will also be eligible to take out a loan ranging from 5 million to 100 million won.

The financial regulators said they would help open up to 30 branches offering microcredit services and counseling in areas populated by low-income families from December of this year to May 2010.


By Jung Ha-won [hawon@joongang.co.kr]



dictionary dictionary | 프린트 메일로보내기 내블로그에 저장