The number of banks participating in a pilot program for the Small Business Credit Scoring Model (SCB)—which evaluates the future growth potential of small business owners using non-financial data such as sales and commercial districts—will be significantly expanded.

The Financial Services Commission announced on July 27 that it held the credit infrastructure subcommittee meeting of the Inclusive Finance Strategy Task Force and the 7th Task Force on Reorganization of the Credit Rating System to review the preparation status for the introduction of the SCB in the banking sector, which was announced last April.

With an increase in banks participating in the pilot operation, the SCB will be applied to a total of 16 banks for business loans amounting to 2.2 trillion won.

Nine banks (K Bank, KakaoBank, Toss Bank, Shsuhyup Bank, iM Bank, Busan Bank, Kyongnam Bank, Gwangju Bank, and Jeonbuk Bank) have newly joined, adding to the initial 7 banks (IBK, Woori, KB Kookmin, Shinhan, NH Nonghyup, Hana, and Jeju Bank).

The pilot operation applying the SCB will sequentially begin starting at the end of next month, depending on each bank's preparation status.

In addition, plans are being pursued to actively utilize the SCB for the Saitdol Loans exclusively for individual business owners, which are being prepared with a target launch in October of this year.

The industry is exploring ways to provide benefits, such as preferential interest rates, to mid-credit individual business owners with growth potential by utilizing the SCB growth ratings.

Starting next year, the SCB is also planned to be expanded to the guarantee screening and evaluation of regional credit guarantee foundations.

Regional credit guarantee foundations are preparing to reorganize their screening and evaluation systems to diversify evaluation items using non-financial information such as commercial district data, in addition to the traditional focus on financials and credit ratings.

Furthermore, relevant regulations and guidelines will be revised next month so that financial sectors, including banks, can actively introduce and utilize the SCB in small business loan screening.

Shin Jin-chang, Secretary-General who presided over the meeting, stated, "We will continuously reflect field opinions and refine the system so that the SCB can stably expand beyond the banking sector to the entire financial sector, allowing more small business owners to gain opportunities for growth."

Meanwhile, the meeting also discussed the necessity of rationalizing the registration period for public information related to personal bankruptcy and exemption from liability.

Last July, the FSC decided that if individuals faithfully fulfill the court's rehabilitation procedures under a repayment plan lasting one year or more, disadvantageous information shared with the Korea Credit Information Services for the existing five years would be deleted early.

At the meeting, opinions were raised that the registration and sharing period (5 years) for disadvantageous information should be shortened even in cases of bankruptcy and exemption from liability to support the swift economic rehabilitation of exempted individuals. Conversely, opinions were also expressed that, unlike personal rehabilitation, bankruptcy and exemption involve the complete discharge of liabilities for insolvent debtors, requiring more prudent review.

Proposals were made during the meeting to support swift economic rehabilitation while minimizing the moral hazard of debtors, and it was decided to review them through further discussions moving forward.

(Photo: Yonhap News)