The revised Saemaul Geumgo Act, which includes management innovation plans to strengthen oversight of Saemaul Geumgo and increase the transparency of board operations, will be promulgated on the 7th.
According to the Ministry of the Interior and Safety on the 6th, the revision reduces and disperses the excessive power of the president of the National Saemaul Geumgo Federation (Federation), which was identified as a major cause during the bank run that occurred in July 2023, and strengthens the previously inadequate oversight functions. It limits the president's role, who represented Federation affairs outside of credit operations, to activities representing the credit union and the chairperson of the board, and changes the system of a one-time reappointment for the term from one term to one four-year term.
It improved the current system by granting executive directors and managing directors representation rights for their respective duties, personnel authority, and budget authority to establish a professional management representation system within the Federation. As a measure for enhancing the financial soundness of Saemaul Geumgo, large credit unions determined by presidential decree will be required to appoint full-time auditors.
Previously, credit unions with total assets exceeding 50 billion won could have both an executive director and an auditor, but in the future, large credit unions will be required to appoint full-time auditors, establishing a permanent monitoring system. Additionally, as an external control measure for credit unions, 'timely corrective measures' that set standards for weak credit unions and the necessary actions according to those standards have been legislated.
The Minister of the Interior and Safety will be able to order actions against weak credit unions, and penalties have been established for noncompliance to ensure the effective implementation of actions such as the consolidation of weak credit unions. To protect customers' assets and prepare for potential bank run situations, it has been improved so that 'borrowing funds,' previously exclusive to the state, can also be done through the Bank of Korea or financial institutions. Furthermore, the reserve fund ratio for credit unions, which had been criticized as low compared to other mutual financial sectors, has been raised from 50% to 80%.