Business · Economy · 5 hrs ago
South Korea’s low-credit loan scheme faces funding shortfall
South Korea introduced a lending scheme for people with low credit to help them get loans.
The scheme relies on designated private lenders, but banks are providing too little funding, according to criticism cited in the report.
That shortfall is said to be limiting the scheme’s ability to serve borrowers.
The loans average 19% to 20% annual interest, according to the Korea Money Lenders Association.
That is close to South Korea’s legal maximum interest rate of 20%, despite the scheme’s aim of helping people with limited access to credit.
The source gives no details about any planned changes or next steps.
South Korea’s preferred loan scheme for low-credit borrowers is struggling to fulfil its purpose, according to a report.
The scheme is facing a shortage of funding from banks.
The average annual interest rate on its loans is 19% to 20%, close to the legal maximum.
The Korea Money Lending Association provided the average-rate figures.
- Who
- The scheme serves low-credit borrowers. Preferred moneylenders provide the loans.
- What
- The scheme is struggling to fulfil its purpose because banks are not supplying enough funding.
- When
- The article was published on October 24, 2026.
- Where
- South Korea.
- Why
- The scheme faces a shortage of funding from banks.
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- Average interest rate
- 19% to 20% a year
- Legal interest-rate ceiling
- 20%
- Funding issue
- Insufficient bank funding
- Source of rate figures
- Korea Money Lending Association