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S Korea: Banks to offer more services for foreigners, ease loan terms

S Korea: Banks to offer more services for foreigners, ease loan terms
S Korea: Banks to offer more services for foreigners, ease loan terms

Jeonbuk Bank, a leading South Korean regional bank, has reportedly announced that it has eased the conditions of its key loan product for foreign customers in the country. Now those with an H-2 visa, or the ‘Work and Visit Visa’, will also be eligible borrowers.

According to reports, earlier, only foreign citizens possessing an E-9 Non-professional Employment Visa were eligible to apply and request for a loan at the bank.

With the loan service, the bank can lend up to ₩20 million ($16,500) to foreign customers at an 11% to 15% annual interest rate. Although the interest rate is higher than the average rate applied by commercial banks to Korean citizens, it is a safer option for foreigners who otherwise would have to seek less reputed options for money borrowing.

Banks in South Korea are infamous among foreign residents, seeking loans or other financial products, for having immensely strict screening terms and conditions, with the frequency of rejections being significantly higher in comparison to Korean residents.

However, they are now starting to acknowledge that foreigners in the country can also diversify their revenue sources, with JB Financial Group, the parent company of Jeonbuk Bank, taking the lead.

Although the group’s business is more regional compared to other major South Korean commercial banking groups, such as KB, Hana, Shinhan, and Woori, it has a strong domestic and international network.

Between 2021 to February 2022, Jeonbuk Bank has extended loans totaling around ₩57.6 billion ($47.3 million) to 8,949 foreign borrowers. The bank operates two financial centers in the country for foreigners, employing several foreign tellers from eleven different countries, and has four lounges focusing on foreign customers as well.

An executive working in one of the four major banks stated that extending loans to foreigners is risky as it is not easy for banks to check for the potential customers' assets or credit scores.

A major lender in the country, Shinhan Bank, launched its first savings account directed at foreigners last year, with a one-year term that allows deposits of up to ₩3 million ($2,461) per month with an annual yield of 1.85%. The applicant can choose a foreign bank to which the money will automatically transfer upon maturity.

Source credit: http://www.koreaherald.com/view.php?ud=20220321000655

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for cuereport.com and a few other distinguished news platforms, pertaining to business and finance.