Pressure from the government to expand inclusive finance is spreading across the financial sector, deepening banks’ 고민. Financial firms agreed to sell bonds held by a private bad bank after President Lee Jae-myung criticised long-term debt collection. Regulators plan to expand policy lending for lower-credit borrowers and launch an inclusive finance task force. Banks warn expanded lending could raise delinquency risks, increase provisions and add to losses tied to policy finance programmes.

K Bank said on Tuesday it launched a Sunshine Loan special case product in line with a restructuring of the Korea Inclusive Finance Agency’s policy finance system. The loan carries an annual interest rate of 12.5 percent, lower than the Sunshine Loan 15 rate. Certain socially vulnerable groups qualify for a 9.9 percent rate. Eligible borrowers include low-income, low-credit applicants, with limits up to 10 million won.