Group earmarks W5tr for debt relief, financing support for vulnerable borrowers, small businesses
Shinhan Financial Group said Wednesday it will write off 500 billion won ($328 million) in delinquent debt this year and provide 4.5 trillion won in financing for vulnerable borrowers and small businesses as part of a 5 trillion won social finance initiative.
The group unveiled its “Inclusive Finance 2.0 ON” program at a meeting of its Productive Finance Task Force in Seoul, positioning the plan as a broader effort to reduce financial blind spots and strengthen support for economically vulnerable groups.
Under the initiative, Shinhan Financial will write off 330 billion won in delinquent debt in the first half of the year and increase the total to 500 billion won by year-end. The write-offs will include claims approaching the statute of limitations.
Shinhan Bank, Shinhan Card, Jeju Bank and Shinhan Savings Bank will participate in the program. Shinhan Card’s portion includes long-term delinquent loans that have been overdue for more than eight years.
The group also plans to scale back the practice of extending statutes of limitations on overdue claims. Debt that has been overdue for more than five years will no longer be automatically extended, with restructuring measures prioritized instead.
In addition, Shinhan will accelerate 1.5 trillion won in financing support originally scheduled for next year, bringing total inclusive-finance assistance to 4.5 trillion won.
The package includes: 2.9 trillion won for low- and middle-income borrowers; 1.45 trillion won for small business owners; 150 billion won for microfinance and refinancing programs.
The group also plans to expand refinancing loans and launch additional products for pension recipients and other financially vulnerable customers.
As part of its efforts to improve access to credit, Shinhan said it will broaden the use of alternative credit assessment models that incorporate non-financial data such as utility payments and spending patterns.
The group believes the approach can help extend financing to lower-credit borrowers, self-employed workers and small businesses that may be underserved by conventional credit-scoring systems.
“Inclusive Finance 2.0 ON goes beyond simple financial assistance and represents a practical way for financial institutions to fulfill their social responsibilities,” Chairman Jin Ok-dong said.
“We will continue to reduce financial blind spots and strengthen the social safety net.”
By Choi Yeon-jae (ch0221@heraldcorp.com)