Starting in September, the deposits protection limit will increase to 100 million won. This adjustment of the deposits protection limit is the first in 24 years since 2001.
On the 15th, the Financial Services Commission noted that it will conduct legislative notice regarding the presidential decree for the partial amendment of six laws aimed at raising the deposits protection limit. The legislative notice period is from the 16th to June 25.
The amendment mainly states that the deposits protection limit will be raised from the current 50 million won to 100 million won for financial companies that protect deposits and individual associations in Mutual Finance, such as NongHyup, credit unions, and savings banks.
The Financial Services Commission said, "Not only will depositors be better protected, but the inconveniences experienced by depositors who have diversified their deposits across various financial companies within the current deposits protection limit will also be alleviated." It also said, "We expect to protect depositors to the level of major countries overseas and to increase confidence in the stability of financial markets as the scale of protected deposits grows."
The Financial Services Commission and the Korea Deposit Insurance Corporation plan to review the appropriate deposit insurance premium rate based on the increase in insured deposits, with implementation planned starting in 2028. Additionally, they will form a task force (TF) with the Financial Supervisory Service and the Bank of Korea to monitor capital flows and market impacts. The Financial Services Commission noted, "In the process of depositors reallocating their deposits to relatively higher interest and more stable financial companies, some financial companies may face liquidity and soundness challenges, so we will closely monitor this situation."
They will also review measures to manage the health of the second financial sector to ensure that deposits flowing into savings banks and mutual finance do not lead to indiscriminate lending. The Financial Services Commission and relevant ministries in mutual finance plan to hold a 'Mutual Finance Policy Council' in May to examine risk management measures in the mutual finance sector.