Shinhan Financial Group is pursuing an inclusive finance project worth 5 trillion won. The key measures include writing off 500 billion won in long-term delinquent debt to help vulnerable borrowers get back on their feet and expanding inclusive financing for low-income people and small business owners to 4.5 trillion won.

Shinhan Financial said on Tuesday it will fully launch the "Inclusive Finance 2.0 ON" project.

Shinhan Financial held the fifth meeting of its Group Productive Finance Task Force at TP Tower in Seoul's Yeouido district on Tuesday. It discussed measures including support for the recovery of long-term delinquent customers, the launch of new products for mid-to-low credit borrowers and expanding inclusive finance through the use of alternative credit assessments.

Shinhan Financial will first write off about 330 billion won in delinquent debt in the first half. It plans to write off a total of 500 billion won in delinquent debt this year, including loans reaching the statute of limitations within the year.

By affiliate, Shinhan Bank will write off an additional 120 billion won after writing off 57.6 billion won in long-term delinquent debt in February. Shinhan Card will write off in a lump sum about 150 billion won in long-term delinquent debt of 8 years or more on Tuesday; these had been excluded from support under the "New Leap Fund" because they were debt of deceased borrowers or high-value claims of 50 million won or more. Jeju Bank and Shinhan Savings Bank will also write off about 6 billion won in delinquent debt.

It will also revise the practice of extending statutes of limitation. Shinhan Financial decided in principle to block extensions for debt more than 5 years old and to pursue debt restructuring first. Even when it inevitably extends the statute of limitation, it will introduce a new re-screening procedure after 3 years.

◆Full-scale expansion of support for low-income people and small business owners

It will also expand the supply of inclusive finance. Shinhan Financial will reach early its original inclusive finance target for this year of 3 trillion won and bring forward 1.5 trillion won planned for next year, providing a total of 4.5 trillion won.

The breakdown consists of 2.9 trillion won in financing for low-income people, 1.45 trillion won in support for small business owners and 150 billion won in its own inclusive finance programmes, including expanded eligibility for microfinance and its mutually beneficial refinancing loans.

In July it will launch "Shinhan Mutually Beneficial Refinancing Loan II". The product expands its mutually beneficial refinancing loans, previously offered to Shinhan Savings Bank customers, to customers of all savings banks. The loan limit is up to 100 million won and the term is up to 10 years.

It will also improve its credit assessment methods. Shinhan Financial plans to expand support for mid-to-low credit borrowers by moving away from assessments centred on past delinquency history and using alternative credit assessment models, in addition to participating in a task force on revamping credit assessment models led by the Financial Services Commission.

Shinhan Bank in particular developed a "low-income alternative credit assessment model" using non-financial data at the end of last year. It has been applying it to credit loans for low-income borrowers since March and plans to use it for screening a new mid-interest-rate loan product scheduled for launch in the third quarter.

It will also use alternative information based on delivery app Ddangyoeyo and ERP data from Jeju Bank's digital corporate finance-focused brand DJ Bank to expand funding for small and medium-sized enterprises and small business owners.

Shinhan Financial Chairman Ok-dong Jin (진옥동) said, "Inclusive Finance 2.0 ON is a way for financial firms to practically fulfil their social responsibility," adding, "As a corporate citizen that plays the role of a social safety net, we will repay the trust of customers and society."