This year, as the depositor protection limit rises from 50 million won to 100 million won, the mutual finance sector has entered a preemptive phase for the expansion of the depositor protection fund. Given that the amount of new money becoming eligible for depositor protection reaches 233 trillion won, the mutual finance sector has also begun preliminary work to reinforce its protective measures. The Mutual Finance Central Association has commissioned an external agency to conduct scenario studies related to the increase in the depositor protection limit. The Financial Services Commission and the Central Association plan to establish additional plans for the accumulation of the depositor protection fund based on this study.
According to the financial sector on the 15th, the five mutual finance central associations, including the credit union, NongHyup, the fishermen's cooperative, the forest cooperative, and the Saemaul Geumgo, have recently commissioned scenario research related to the increase in the depositor protection limit. The goal of this research is to determine the amount of deposits that will shift to the mutual finance sector when the depositor protection limit rises from 50 million won to 100 million won, the required additional accumulation for the depositor protection fund, and ways to strengthen the fund. Each central association plans to establish an appropriate scale for the depositor protection fund and strategies for its expansion based on the research results.
Unlike banks and savings banks, mutual finance is protected based on individual cooperative laws. While banks and savings banks can protect depositors' money with the fund from the Korea Deposit Insurance Corporation, mutual finance protects members' money with funds accumulated by each central association. The central association collects part of the deposit assets from unit cooperatives as contributions to build up the fund. In the case of NongHyup, 0.18% of deposits are paid to each central association, while Saemaul Geumgo pays about 0.15% of deposits.
The mutual finance sector anticipates that the central associations will need to make additional contributions to the depositor protection fund in line with the increase in the depositor protection limit. If the protection limit rises from 50 million won to 100 million won, approximately 233 trillion won will be newly included as protection targets. For consumers, the interest rate options may be attractive, but mutual finance, which has been seen as less reliable than banks, may allow for more安心 deposits. The mutual finance sector is also considering this 'money move' and is evaluating how much more it needs to accumulate for the depositor protection fund.
The Financial Services Commission and the central association plan to discuss the re-establishment of the target amount for the depositor protection fund and adjustments to the contribution rate based on the research results. The contribution rate will be determined by the depositor protection fund management committee within the central association, within the range specified by the enforcement ordinance of the cooperative law. Since this matter does not require amendments to laws or enforcement ordinances, the Financial Services Commission explained that it can quickly set new contribution rates and expand the fund.
A Financial Services Commission official noted, 'The depositor protection limit for mutual finance will also be raised alongside the protection limits for banks and savings banks as a top policy priority,' and added, 'The expansion of the depositor protection fund will be pursued without issue in line with the schedule for increasing the depositor protection limit.'