'Inclusive Finance Scorecard' to Determine Bank Contributions Soon to Be Released... Governance to Take Priority in Early Phase

Financial Services Commission to Announce Comprehensive Evaluation System as Early as This Month
Key Evaluation Areas: CIFO, Dedicated Organizations, and Board Reporting Systems
Bank Performance Reports to Be Released; Contribution Rates to Differ by Bank Performance

The "Inclusive Finance Comprehensive Evaluation System," which will determine the contributions of each bank to the Korea Inclusive Finance Agency, is expected to be released as early as this month. According to financial authorities, during the initial one to two years of the system's implementation, the focus will be on closely examining to what extent inclusive finance is embedded within the governance and decision-making structures of financial institutions.

Yonhap News

On September 3, according to the financial sector, the Financial Services Commission and the Inclusive Finance Strategy Task Force are preparing standards for the comprehensive evaluation of inclusive finance and are reviewing plans to disclose the evaluation system, potentially in September. The Chairman of the Financial Services Commission is scheduled to make the official announcement at the Inclusive Finance Grand Transformation Conference.

The authorities and the task force are also considering a plan to release the initial report cards for each bank, based on detailed evaluation criteria, the inclusive finance supply performance for the first half of this year, and the current status of governance structures. Since the government has consistently emphasized inclusive finance since the beginning of this year, and with substantial supply performance accumulated by each financial holding group, they consider an evaluation to be feasible. However, internal discussions are ongoing regarding the precise timing for applying the evaluation system and whether to disclose the rankings of banks—especially those receiving lower grades—taking into account potential burdens that the immediate release of bank rankings could place on the sector following the introduction of the new evaluation standard.

The evaluation system is expected to reflect not only the results of support for inclusive finance but also whether banks have established practical governance structures for inclusive finance as core criteria. In particular, qualitative indicators assessing whether banks have implemented inclusive finance governance are expected to be key differentiators in the evaluations, especially in the early stages. An official participating in the inclusive finance task force said, "Whether the Chief Inclusive Finance Officer holds real authority is considered just as important as the size of inclusive finance supply," adding, "We believe that a binding governance system is crucial for the sustainable provision of inclusive finance."

Specifically, the evaluation will focus on whether banks have appointed a Chief Inclusive Finance Officer (CIFO) and established a dedicated organization, as well as whether real authority is granted to executives and departments responsible for inclusive finance. The system is also expected to evaluate whether strategies, budgets, and risk management frameworks for inclusive finance are established, and whether inclusive finance performance is reflected in board of directors reports and internal performance evaluations. The assessment will emphasize qualitative evaluation of whether an actual execution system is functioning, not just the existence of titles or organizational units.

The evaluation results will be linked to the common contributions that banks pay to the Korea Inclusive Finance Agency. Banks’ inclusive finance performance will be rated across five grades: top-performing banks will have their contribution rates reduced, while underperforming banks will see rates increased.

Currently, the common contribution rate for banks to the Korea Inclusive Finance Agency is 0.1 percent of outstanding household loan balances. As a result, the annual contribution from the banking sector amounts to approximately 381.8 billion won. Since the evaluation results could affect the financial burden for each bank, the sector is paying close attention to the detailed criteria and timing of the first assessment. The specific range for adjusting contribution rates and the timing of its application will be decided in the future.

This content was produced with the assistance of AI translation services.