KakaoBank will cut rates on policy-backed loans for low-income and financially vulnerable borrowers to ease their interest burden.

KakaoBank said it will cut interest rates from May 15 on its currently offered loan products for low-income borrowers, including New Hope Loan II (New Hope Loan) and Sunshine Loan.

KakaoBank began offering the New Hope Loan in September last year. This year, in line with a revamp of policy-backed loans by the Korea Inclusive Finance Agency, it has reorganised its Sunshine Loan 15 and Sunshine Loan Bank products into "Sunshine Loan General" and "Sunshine Loan Special Case," respectively, and is operating them.

It will first lower the New Hope Loan rate by 0.30 percentage points. The product is an unsecured credit loan funded by the bank's own resources for financial consumers who have low income or credit and have difficulty using formal-sector finance.

It will also cut Sunshine Loan rates by 0.75 percentage points. KakaoBank said it applied the expected rate-cut effect in advance of the July implementation of a revised Banking Act that will prevent banks from factoring Korea Inclusive Finance Agency contributions into loan rate calculations.

KakaoBank plans to expand support for low-income finance by supplying the New Hope Loan and Sunshine Loan at minimum rates in the mid-4 percent range through this rate adjustment.

A KakaoBank official said, "We cut rates to ease the financial burden on low-income people." The official added, "We will take the lead in practising inclusive finance for financially vulnerable groups such as mid- to low-credit borrowers and those with limited financial history."