IBK to Launch KRW 500 Billion KOFR-Based Loan for SMEs
Industrial Bank of Korea (IBK) will launch a KRW 500 billion loan product based on the Korea Overnight Financing Repo Rate (KOFR). The product is intended to support small and medium-sized enterprises (SMEs) facing temporary cash-flow difficulties due to delayed collection of sales proceeds and to broaden customers' choice of interest rates.
IBK said on October 25 that it would launch the “KOFR Short-Term Liquidity Support Loan” on October 26. KOFR is a benchmark interest rate calculated based on overnight repurchase agreement (RP) transactions collateralized by government bonds and Monetary Stabilization Bonds. IBK has adopted KOFR as the benchmark rate for this loan product.
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The loan is available to SMEs experiencing temporary cash shortages due to delayed collection of sales proceeds, seasonal funding needs, or increased payroll and rental expenses. SMEs based outside the capital region will receive an interest rate reduction of up to 0.3 percentage points. To ease the burden of short-term repayment, IBK will also waive early repayment fees in full. An IBK official said, “This is significant because it broadens customers' choice of interest rates,” adding, “We hope it will help SMEs facing difficulties due to temporary liquidity shortages.”
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