Major Korean Banks Account for Less Than 1% of Stepping Stone Loan Volume Despite Surge

The South Korean government’s overhauled ‘stepping-stone loan’ program pushed new-lending volumes up to 141억1천만원 during the first eight months of the year, Yonhap News Agency reported. Parliamentary data released by National Assembly Political Affairs Committee member Park Min-kyu showed that major lenders originated only a tiny fraction of the credit-buildup loans designed to transition vulnerable borrowers into the formal banking system.

Stepping-Stone Loan Volumes Surge Following Government Overhaul

The stepping-stone loan acts as part of a credit build-up framework enabling policy microfinance borrowers who maintain steady repayment records to access commercial bank credit loans at interest rates capped at nine percent.

Government modifications late last year relaxed several support requirements while introducing an integrated credit evaluation model designed to encourage broader participation from both lenders and borrowers. This shift triggered a dramatic expansion in volume compared to prior years. Annual performance had plummeted from 1억7천200만원 in 2021 down to 3천400만원 in 2024, before edging up to 9천700만원 last year, according to the official figures. The 141억1천만원 recorded through August represents roughly 145 times the volume of the entire previous year. Parliamentary and Financial Supervisory Service records show that during the same eight-month period, the program received 2,699 application counts, executed 854 counts, and held a total loan balance of 127억9천700만원 as of the end of August.

Four Major Commercial Lenders Account for Less Than One Percent of New Loans

Despite the sharp aggregate increase, newly issued funds concentrated heavily within a select few institutions that utilized non-digital channels or specialized remitting structures. iM뱅크 led all institutions with 69억9천만원 in new loans during the eight-month period, followed by the Industrial Bank of Korea with 59억7천700만원, with the two lenders jointly capturing 91.9 percent of the total volume at 129억6천700만원, Yonhap News Agency reported. Bank-specific support comparisons for January through August showed iM뱅크 logging 1,194 application counts, 356 execution counts, 6억9천900만원 in new loan volume, and a 6억5천2500만원 loan balance, while the Industrial Bank of Korea recorded 1,194 application counts, 421 execution counts, 5억9천7700만원 in new volume, and a 5억2천7500만원 balance. Additional regional lender breakdowns included Busan Bank with 70 application counts, 55 execution counts, 7억5천400만원 in new volume, and a 5억9천800만원 loan balance.

In sharp contrast, the four major commercial banks—KB Kookmin, Shinhan, Woori, and Hana—executed just nine loans totaling 1억3천만원, representing a meager 0.9 percent market share. Individual bank breakdowns showed Woori Bank issuing 8천만원, Shinhan Bank recording 3천400만원, and KB Kookmin Bank posting 1천600만원. Detailed filings further revealed Shinhan Bank with 7 application counts, 4 execution counts, 3천400만원 in new volume, and a 4천500만원 loan balance; Woori Bank with 10 application counts, 4 execution counts, 8억천만원 in new volume, and a 7억9천만원 balance; Hana Bank with zero applications or executions and a 400만원 loan balance; KB Kookmin Bank with 4 application counts, 1 execution count, 1천600만원 in new volume, and a 1억4천만원 balance; NH농협은행 with 216 application counts, 13 execution counts, 2억5천900만원 in new volume, and a 2억4억400만원 balance; Suhyup Bank with 4 application counts, zero executions, and an empty new volume with no balance data; and Standard Chartered Bank with zero applications or executions and an 1억1천만원 loan balance.

Financial Authorities Point to Alternative Microfinance Focus As Demand Outpaces Supply

Financial authorities and industry observers attribute the low commercial bank participation to major lenders concentrating their inclusive finance efforts on proprietary microfinance initiatives like SaehuiMang Networks. The Financial Supervisory Service reported that the five major banks supplied approximately 3 trillion won through SaehuiMang Networks last year, accounting for 75.2 percent of the entire banking sector’s supply.

Meanwhile, data from the Korea Inclusive Finance Agency indicates that annual demand for stepping-stone loan capital stands at an estimated 12조5천억원 규모 across a large number of potential applicants, leaving current banking sector volumes far below projected needs. Assemblyman Park Min-kyu criticized the lack of institutional follow-through.

Park Min-kyu stated that financial authorities have not set supply targets for the phased settlement of policy microfinance users into the banking sector, and the four major banks are practically ignoring it. He emphasized the need for practical measures to encourage the banking sector to handle stepping-stone loans.