The deposit insurance limit is expected to rise from the current 50 million won to 100 million won, with the timing set to be after September. The specific implementation date will be determined as the Financial Services Commission (FSC) holds discussions with related ministries and as the second financial sector completes its preparation. The FSC plans to raise the deposit insurance limit as quickly as possible, communicating not only with relevant ministries but also with the Ministry of Legislation.
According to the financial sector on the 23rd, the FSC is tentatively assessing that the timing for raising the deposit insurance limit will be after September. The FSC is currently preparing to announce a legislative notice regarding the amendment of the Deposit Insurance Act enforcement ordinance. At the same time, it is coordinating with relevant ministries to announce the amendments to the Deposit Insurance Act and enforcement ordinances related to mutual finance on the same day. The FSC is expected to determine and announce the exact timing for raising the deposit insurance limit within the first half of the year.
Previously, at the end of last year, the National Assembly passed an amendment to the Deposit Insurance Act to raise the deposit insurance limit from 50 million won to 100 million won. The deposit insurance limit is a system that protects a portion of customers' deposits through public funds when financial institutions are unable to return deposits to customers due to insolvency. The current deposit insurance limit is 50 million won per customer of a financial institution. If the deposit insurance limit rises to 100 million won this year, it will be the first enhancement of deposit protection in 24 years since the last limit increase in 2001.
The factor influencing the timing of implementation is the speed of discussions among the relevant ministries. If only the enforcement ordinance of the Deposit Insurance Act changes, the deposit insurance limits for banks and savings banks will increase, but the limits for mutual finance sectors such as NongHyup and Saemaeul Geumgo will not change. To raise the deposit insurance limit for mutual finance, amendments to each cooperative law's enforcement ordinance must be made. Since each mutual finance cooperative has different governing ministries, the FSC cannot uniformly modify the enforcement ordinance. Therefore, the FSC is coordinating among ministries under the premise of announcing the enforcement ordinance amendments on the same day as the Ministry of Interior and Safety (Saemaeul Geumgo), Ministry of Agriculture, Food, and Rural Affairs (NongHyup), Ministry of Oceans and Fisheries (Fisheries Cooperative), and Korea Forest Service (Forest Cooperative).
The ministries responsible for the mutual finance sector also agree to raise the deposit insurance limit to 100 million won. However, since the management environments differ among the mutual financial institutions, they are cautious about determining the timing of implementation. Before the limit increase, the financial sector must improve management systems and redesign products based on changes in deposit balances. The more simultaneously the preparation process across the entire financial sector is shortened, the sooner the deposit insurance limit implementation date can be advanced. Currently, the Korea Deposit Insurance Corporation is providing know-how on customer guidance and advertising regulations to the entire financial sector to assist in pre-preparation. Initially, the FSC considered an early implementation of raising the deposit insurance limit in July, but it has been reported that the target has been adjusted to after September, considering the preparation period of the second financial sector.
The FSC is also preparing a plan to shorten administrative procedures, keeping in mind the time involved in the preparation of the mutual finance sector and ministry consultations. According to the Administrative Procedure Act, government ministries must allow a legislative notice period of more than 40 days after first announcing the enforcement ordinance amendment. The intention is to sufficiently gather opinions from related agencies and the public during the legislative notice period. Exceptionally, ministries can consult with the Ministry of Legislation to shorten the legislative notice period to less than 40 days based on the protection of citizen rights or public welfare. The FSC plans to discuss the deadline for shortening the legislative notice and expedite reviews with the Ministry of Legislation.
An FSC official said, "The increase in the deposit insurance limit is a task on which several institutions are working diligently," and added, "We are inspecting the readiness of the financial sector, with the premise that all ministries will announce the enforcement ordinance amendments simultaneously."