Shinhan Financial raises inclusive finance target to 4.5 trillion won, to cancel 500 billion won in overdue debt

Shinhan Financial Group will raise its inclusive finance supply target for this year to 4.5 trillion won from the previous 3 trillion won (about $1.98 billion) and will cancel approximately 500 billion won in overdue debt on its own.

Shinhan Financial announced Wednesday that it had launched the "Inclusive Finance 2.0 ON" project, worth a total of 5 trillion won, at the fifth meeting of the group's Productive Finance Promotion Committee, held at TP Tower in Yeouido, Seoul.

Shinhan Financial Group Chairman Jin Ok-dong said at the meeting that "Inclusive Finance 2.0 ON goes beyond simple support — it is a way for a financial company to genuinely fulfill its social responsibilities." He added that the group would "repay the trust of customers and society by reducing financial blind spots and fulfilling its role as a corporate citizen that serves as a social safety net."

The project centers on three initiatives: supporting customers' financial recovery through the cancellation of long-term overdue debt and improvements to statute-of-limitations practices; launching new products and services targeting low- to mid-credit borrowers; and expanding inclusive finance support through the use of alternative credit scoring. As a first step, Shinhan Financial plans to cancel approximately 330 billion won in overdue debt in the first half of this year. Total annual cancellations will reach 500 billion won once debts approaching their statute-of-limitations deadline are included.

By affiliate, Shinhan Bank — which proactively canceled 57.6 billion won in long-term overdue debt in February — will cancel an additional approximately 120 billion won. Shinhan Card will cancel in bulk approximately 150 billion won in overdue debt outstanding for eight or more years that had been excluded from the Fresh Start Fund because the debts involved deceased borrowers or high-value claims of 50 million won or more. Jeju Bank, Shinhan Savings Bank and other affiliates will also participate, canceling approximately 6 billion won in overdue debt.

Shinhan Financial will also reform its practice of extending statutes of limitations. The group plans to block extensions in principle for debts more than five years old, prioritizing debt restructuring instead. In cases where an extension is unavoidable, a "re-examination after three years" procedure will be created and applied.

At the second meeting of the Inclusive Financial Transformation conference held in February, the Financial Services Commission highlighted Shinhan Financial's proactive measures to reduce overdue debt for vulnerable borrowers, citing the group as a best-practice example of inclusive finance.

Shinhan Financial also said it had achieved its 3 trillion won inclusive finance target for this year ahead of schedule and would bring forward the 1.5 trillion won originally planned for next year. The breakdown covers 2.9 trillion won for low-income finance (including mid-rate loans), 1.45 trillion won in support for small business owners, and 150 billion won for microfinance — encompassing loan and asset-building support — as well as an expansion of the Sangsaeng Refinancing Loan program.

New inclusive finance products are also in the pipeline. On July 1, Shinhan Financial will launch "Shinhan Sangsaeng Refinancing Loan II," an expanded version of the existing Sangsaeng Refinancing Loan that had previously been available only to Shinhan Savings Bank customers, opening it to customers of all savings banks. The product will offer loans of up to 100 million won for a maximum term of 10 years, with a non-face-to-face loan transfer system to improve customer convenience. On June 8, the group introduced an "emergency loan for basic pension recipients" and will sequentially roll out additional tailored inclusive finance products: asset-building support for microfinance borrowers with strong repayment records, a cashback on Haetsal Loan guarantee fees, and a senior safety care service.

Shinhan Financial is actively participating in the Financial Services Commission's task force on credit scoring model reform and will expand support for low- to mid-credit borrowers through the introduction of alternative credit scoring models.

Shinhan Bank developed its "alternative credit scoring model for low-income borrowers" at the end of last year, assessing customers' repayment capacity using a range of non-financial data such as living expenses, utility bills and automatic transfers. The model has been applied to low-income personal credit loans since March and will also be used as a screening criterion for a new mid-rate loan product set to launch in the third quarter.

The group also plans to expand funding for small and medium-sized enterprises and small business owners by leveraging alternative data from the delivery application "Ddanggyeo" and enterprise resource planning data from DJ Bank, Jeju Bank's digital corporate banking brand.