The online investment-linked finance industry welcomed the Financial Services Commission's measures to invigorate funding supply for borrowers with mid to low credit. It said it will increase the supply of mid-rate loans and raise trust in the sector, driven by an expansion of mutual finance-linked investment.

The Online Investment-Linked Finance Association said on Sept. 23 it welcomed the FSC's "measures to invigorate funding supply for mid- and low-credit borrowers in the online investment-linked finance industry" announced a day earlier.

The association said the measures reflected the industry's results in supplying unsecured credit loans to mid- and low-credit borrowers. It said it would use the reforms to expand mid-rate funding supply and respond responsibly to additional regulations.

The industry said outstanding personal credit loans rose to 603 billion won from 43.7 billion won after savings bank-linked investment started in May last year. About 90 percent of the funds supplied went to borrowers in the bottom 50 percent of credit scores.

The measures include selectively granting incentives to qualified online investment-linked finance firms and expanding eligible participants in financial institution-linked investment from savings banks to mutual financial institutions. The association said such selective support would contribute to the industry's continued growth and financial innovation.

As of September this year, 46 firms are registered in the industry, and total outstanding loans across the sector are about 2.3 trillion won.

The association said it expects that an expansion of mutual finance-linked investment will help lower average loan rates to the 8 percent range from the 11 percent range and strengthen the sector's role in supplying mid-rate funding between banks and non-bank financial institutions.

Hong Jae-moon (홍재문), chairman of the Online Investment-Linked Finance Association, said, "We have proven that we can be an agent of innovation and inclusion." He said, "We will respond to the authorities' trust contained in these measures with mid-rate loans in the 8 percent range and a credit ladder to banks."