SEOUL, Feb. 9 (Korea Bizwire) — The government has announced plans to set up a 300 billion won support fund for socially responsible financial companies and cooperatives.
A number of government branches reached an agreement on the proposal during a meeting on Thursday, including the Office for Government Policy Coordination, the Financial Services Commission, the Ministry of Strategy and Finance, and the Ministry of Employment and Labor.
The new initiative is designed to foster socially conscious financial agencies and develop companies with social causes and related financial products, and the government plans to establish the new fund with over 100 billion won some time this year as the first step of the plan.
Under the new plan, social companies, cooperatives and community interest companies will be eligible for government funding of up to 300 billion won over the next five years, as part of efforts to encourage investment, financing, and standing surety for social causes, instead of financial acts like donations, for instance.
The fund will be supplied by both the central and local governments, as well as financial resources for microcredit schemes.
In the meantime, socially conscious financial agencies such as the National Credit Union Federation of Korea will also play a crucial role, as they will be allowed to participate and also suggest new projects.
Between 5 billion won and 8 billion won in savings from dormant accounts will be allowed for credit loans under the new proposal, while policy funds for small and medium-sized enterprises will also be increased.
The Korea Credit Guarantee Fund and the Korean Federation of Credit Guarantee Foundations will be encouraged to stand surety for socially conscious financial companies.
South Korea’s efforts to encourage social economy have faced criticism in the past for a lack of funding for socially conscious companies, with the financial services sector showing little to no interest in getting on board.
Against this backdrop comes the government’s decision to create a social benefit fund, with a main goal to supply capital for investment projects, loans, and setting up companies for the sake of society.
Ashley Song (firstname.lastname@example.org)