8,517 Mid- and Low-Credit Applicants for IBK Inclusive Loan Denied Due to Regulatory Limits

76% of Applicants Denied Loans

Impact of the "June 27th Measures" Limiting Loans to Annual Income

It has been revealed that out of approximately 30,000 applicants for IBK Industrial Bank of Korea's loan products targeting individuals with mid- to low credit ratings, around 8,500 were denied loans due to restrictions on their credit loan limits.

Seoul Jung-gu IBK Industrial Bank of Korea Building Exterior. Industrial Bank of Korea

According to audit materials submitted by Industrial Bank of Korea to Assemblyman Park Minkyu of the National Policy Committee of the National Assembly, as of September 16, only 7,807 out of 30,256 applicants had been approved for the “Good Rate Inclusive Loan” launched on July 31. The approval rate was 25.8%.

The Good Rate Inclusive Loan is a product that lends up to 20 million won at an annual rate of 4.9% to mid- and low-credit borrowers in the lower 50% of credit scores, within their annual income range. For the youth segment, a preferential interest rate of 4.7% per annum is applied.

Of the 22,449 applicants who were denied a loan, 8,517 (37.9%) were rejected due to “insufficient limit.” This was followed by existing loans from Industrial Bank of Korea (4,847 applicants) and internal rating restrictions (3,580 applicants).

According to Industrial Bank of Korea, “insufficient limit” refers to cases where, under the June 27 real estate measures implemented by the government last year, applicants are unable to receive additional credit loans since such loans are now limited to annual income levels. This means that the same regulations for ordinary credit loans are being applied to inclusive finance products that were launched to support mid- and low-credit borrowers.

Assemblyman Park pointed out that the range of exceptions for inclusive finance product regulations should be expanded and the application requirements clarified, considering the repayment ability of mid- and low-credit individuals.

In fact, over the 46 days since the product was launched, 63.44 billion won in loans have been provided to 6,344 people, with 61.7% of users in their 20s and 30s, and 54.8% having an annual income of less than 40 million won. Among young people aged 34 or younger, 3,087 received support, totaling 40.2 billion won.

By credit score, the largest group of users (3,655 people, or 57.6%) were in the lowest fifth quintile with scores ranging from 835–889 according to NICE standards. In contrast, only 163 people (2.6%) were from the lowest first quintile, and 184 people (2.9%) from the second lowest quintile accessed the loan.

The Good Rate Inclusive Loan is included in the total volume management of household loans in the banking sector, but only 30% of the principal is counted toward the total. Initially, Industrial Bank of Korea planned to provide around 300 billion won annually over three years, but in consideration of market demand, it decided to supply up to 1 trillion won in total with no annual cap.

Assemblyman Park stated, "Those among the mid- and low-credit population who most need support are being blocked by lending regulations from using these financial products," adding, "There needs to be a review of institutional support measures, such as excluding inclusive finance products for mid- and low-credit borrowers from household loan volume management, providing incentives for banks, or granting exceptions to the annual income limit on credit loans."

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