By Park Hyong-ki
Staff Reporter
The Financial Services Commission (FSC) said it will delete the poor credit history of insolvent debtors after they restructure their debts and improve their finances under the guidance of the newly-launched microcredit agency.
``We will remove such records of credit delinquents who had secured loans from private moneylenders once they show improvement under the credit recovery programs,'' FSC Director General Kim Gwang-soo told a press conference Thursday.
The regulatory body launched the microcredit foundation at the Korea Chamber of Commerce and Industry headquarters in downtown Seoul, with the aim of supporting over seven million credit delinquents and low-income earners. It has not yet given an official English name for the foundation.
The official said the commission will delete their bad ratings if they show improvements within two years. Such ratings are recorded at the Korea Federation of Banks.
Kim said the regulatory body will supply different recovery programs for credit defaulters, low-income families, struggling businesspeople and jobseekers in accordance with their credit ratings.
The agency will support them with funds derived from dormant accounts at financial firms. It has agreed to manage the funds with 17 banks and 32 insurance companies, and has sealed a deal to utilize dormant accounts at 60 percent of the country's mutual savings banks.
To this end, the commission said the foundation has secured an estimated 200 billion won for financing the financially underprivileged. ``But it could be less as owners of the accounts can retrieve their money at anytime,'' said Kim.
Under the plan, the foundation will encourage domestic insurance companies to provide micro-insurance policies to insolvent people, allowing them to pay a minimum amount of insurance fees over a certain period of time. Kim noted that global insurers such as AIG offer micro-insurance policies.
The commission said the foundation will begin accepting applications from credit delinquents and low-income earners in May, and begin recovery programs the following month.
Its foundation is in line with President Lee Myung-bak's pledges to help credit delinquents recover their financial health early this year.
phk@koreatimes.co.kr