Lender announces plans to improve loan procedures, interest rate system


Shinhan Financial Group announced on Thursday plans to build up public trust as well as protect the financial market from external variances and support economy recovery. It follows the meeting between Financial Services Commission chairman Kim Seok-dong and six financial group heads in August to discuss banking groups’ roles in social contributions.

Shinhan said in a press release that it will launch a special team that will focus on securing the health and stability of the financial market by preparing for risks. The team will run self-administered fluidity stress tests as well as analyze economic situations and its influences.

On top of the three loan products available since August by the group to support new small and medium-sized companies that are in financial difficulties, the group also announced plans to make the best use of its Fast Track program which provides immediate financial support to companies in need, through a partnership with Korea Credit Guarantee Fund. 

“We will expand the ‘New Hope Dream Loan’ which offers loans to those with low credit rankings and run a Credit Management Counseling Center for the financially weak including multicultural families,” said the group.

To stabilize household debt, the group vowed to improve its loan structure as well as readjust the payment period for families temporarily experiencing financial difficulties, or alleviate the interest burden.

In response to recent issues raised concerning interest rates on certificates of deposit, or CDs, Shinhan vowed to improve the overall interest rate system. It will issue an average of 400 billion won ($357 million) worth of CDs every month in an effort to normalize the CD interest rate.

“Additional interest rates imposed by the branch manager as well as on small loans of below 5 million won will be abolished. We will make a new guideline on household interest rates,” said the group.

The group said it will regularly check on the financial difficulties its related companies may suffer from, and increase funding for such companies to support local economy, especially in the export and investment sectors. It will expand the Company Financial Difficulties Counseling Center, which is currently open to small and medium-sized companies to consult on financial matters, to all companies.

Taking into account the recent problems caused by some financial firms’ inaccurate loan contracts, Shinhan also plans to take measures to prevent any damages that could be caused to customers. It will enhance the monitoring system and examine the propriety of the loan contracts, as well as strengthen education for employees and internal operations.

By Park Min-young  (claire@heraldcorp.com)