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South Korean Banking Sector Considers Interest Refund Plan for Self-Employed

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BNN Correspondents
New Update
South Korean Banking Sector Considers Interest Refund Plan for Self-Employed

In a bid to alleviate the financial strain on self-employed individuals and small business owners, the South Korean banking sector is contemplating a significant move. The industry is weighing up a plan to refund interest payments exceeding 5% to individual business owners. The maximum refund amount under consideration is up to 1.5 million won.

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Interest Refund: A Win-Win Financial Support

The banking sector's people’s livelihood finance support plan task force has convened to discuss this innovative approach to win-win finance. The target of this support plan is self-employed individuals and small business owners who have corporate loans with an interest rate exceeding 5% as of the end of 2023. The initial discussions point towards a possible interest refund of up to 1.5 million won per year for a loan of 100 million won.

Participation and Support Scale

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Eighteen banks have shown their commitment to participate in this cashback support program. The total support is estimated to be around 2 trillion won. The industry is deliberating on the timing and frequency of payment, with options including lump sum, monthly, and quarterly payments. However, quarterly payments seem to be a more likely route than lump sum payments. The banking industry is already seeking strategies to raise the total support scale to 2 trillion won, excluding the win-win financial support plan announced by some banks and financial holding companies last month.

Implication for the Banking Sector

This proposed plan signifies a potentially groundbreaking shift in South Korea's banking sector's approach towards supporting small businesses and the self-employed. If implemented, it could provide much-needed relief to those impacted by high-interest rates and could pave the way for similar initiatives in other regions.

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