Micro Credit Program to Start This Year

A micro credit program to start this year will extend loans to 200,000 to 250,000 low-income households with low credit ratings at five percent interest.

To finance the program called Meeso Finance, the government will raise two trillion won (1.6 billion U.S. dollars) for 10 years from this year.

The Financial Services Commission yesterday submitted a report on the plan to President Lee Myung-bak at an emergency economy meeting. The idea is to expand an existing micro-finance foundation for low-income households to accommodate the new program and increase the number of branch offices to 200 to 300 nationwide.

Those eligible for the loans include low-income households that have never received subsidies with a credit rating lower than grade seven or not gotten help from the Credit Counseling and Recovery Service. Eligible persons can get a loan of five million won (4,150 dollars) to 100 million won (830,000 dollars) over five years.

The Federation of Korean Industries will provide one trillion won (830 million dollars) and the financial sector will match that amount to fund the program. The commission will begin a pilot program as early as this year.

legman@donga.com yongari@donga.com