South Korea Eases Lending Rules to Narrow Interest Rate Gap for Low-Credit Borrowers

According to South Korea's Financial Services Commission on July 7, the agency is advancing inclusive finance measures to address interest rate disparities in the lending market. The commission announced plans to lower rates for borrowers with mid-to-low credit scores, which currently range from 5.8% to 14.5% across financial institutions despite an average of 7.9% as of March 2026.

The FSC will relax prudential regulations and explore new programs combining banks and secondary financial institutions. Proposed reforms include adjusting risk-weights for inclusive finance, revising loan loss provisioning standards, and strengthening cooperative financial institutions through incentive structures and management evaluation reforms.