Shinhan Bank will offer mid-rate loans to mid-to-low credit borrowers with an annual interest rate cap of up to 6.9 percent. It will lower the burden of financing costs and the borrowing threshold by refining screening criteria, improving repayment terms for Saehopeum Holssi, and launching a Super SOL-exclusive mid-rate loan.

Shinhan Bank said on Monday it will implement a "mid-rate loan support package" as part of Shinhan Financial Group's "Inclusive Finance 2.0 ON" project.

The package is the bank-level concretisation of Shinhan Financial's Inclusive Finance 2.0 ON project worth a total of 5 trillion won announced on June 10. The package consists of 3 support measures currently in place and a new product scheduled for launch in August.

Shinhan Bank will first implement the "Shinhan mid-rate loan" for mid-to-low credit borrowers, with a maximum rate of 6.9 percent a year. If the borrower’s actual calculated interest rate exceeds 6.9 percent a year for borrowers in the bottom 50 percent based on external credit scores from NICE or KCB, the bank will apply a maximum rate cap of 6.9 percent a year. If the calculated rate is 6.9 percent a year or lower, it will apply that calculated rate as is.

It also refined screening criteria for mid-to-low credit borrowers. This will allow the bank to provide mid-rate loans within a gap of up to 2 percentage points compared with the average interest rate on credit loans, including for high-credit borrowers.

It also improved repayment terms for existing financial products for low-income borrowers. It extended the instalment repayment period for Saehopeum Holssi to a maximum of 84 months from the previous maximum of 60 months. It also expanded the preferential instalment repayment rate discount to 1.1 percentage points from 0.3 percentage points.

In August, the bank plans to introduce a "Super SOL-exclusive mid-rate loan" to mark the launch of Super SOL.

A Shinhan Bank official said, "We have reduced the burden of actual financing costs by improving interest rates, screening and the repayment structure together for mid-to-low credit customers." The official added, "In line with the purpose of Inclusive Finance 2.0, we will increase access for financially vulnerable groups and reduce blind spots."