Shinhan Bank caps interest rate at 6.9% for low-to-mid credit borrowers in inclusive finance push

Shinhan Bank said it will roll out a "mid-rate loan support package" aimed at reducing the financial burden on low-to-mid credit borrowers, combining an interest rate cap, enhanced loan screening and more flexible repayment terms.

The package, announced Tuesday, is the bank-level implementation of the 5 trillion won inclusive finance initiative called "Inclusive Finance 2.0 ON," which Shinhan Financial Group unveiled this month.

Under the package, Shinhan Bank will operate a "Shinhan mid-rate loan" product that caps the annual interest rate at 6.9 percent for customers in the bottom 50 percent of external credit scores from NICE and KCB. Borrowers whose calculated rate exceeds 6.9 percent per year will have the cap applied automatically, while those with a lower calculated rate will receive that rate as-is. The benefit applies automatically to most personal unsecured loans, with some products excluded.

The bank also overhauled its screening criteria for low-to-mid credit borrowers. The revised standards more precisely reflect repayment capacity and financial transaction patterns, and now extend to customers with limited credit histories — such as full-time homemakers and retirees. Through these changes, the bank aims to keep mid-rate loan rates within 2 percentage points of the average rate on standard personal credit loans.

Shinhan Bank will also ease the repayment burden on Saeheuimangholssi, a financial product for low-income borrowers. The installment repayment period will be extended from a maximum of 60 months to 84 months, and the preferential rate for installment repayment will be widened from 0.3 percentage points to 1.1 percentage points.

In August, the bank plans to launch a "Super SOL-exclusive mid-rate loan," a digital-only product. The loan will apply an alternative credit scoring model designed for low-income borrowers, more precisely capturing their repayment capacity and financial transaction characteristics.

"We focused on lowering the actual financial cost burden for low-to-mid credit customers by improving rates, screening and repayment structures together," a Shinhan Bank official said. "We will continue to improve financial access for vulnerable groups and reduce blind spots in our coverage."

Meanwhile, Shinhan Financial Group announced the Inclusive Finance 2.0 ON project on June 10, centered on writing off about 500 billion won in overdue bonds and supplying 4.5 trillion won in inclusive finance, for a combined total of 5 trillion won. The group also plans to launch "Shinhan Mutual Refinancing Loan II" next month, targeting all savings bank customers.