It has been reported that the Saemaul Geumgo has handled more than 37 trillion won in off-region loans over the past five years.
Off-region loans refer to loans that do not fall within the region of the Saemaul Geumgo's office, which is based on the debtor's address, business sites, or the location of collateral real estate. The Saemaul Geumgo restricts such off-region loans to no more than one-third (33%) of the annual new credit handling amount.
According to data submitted to Rep. Heo Young of the Democratic Party of Korea on 3rd by the Ministry of Interior and Safety, the Saemaul Geumgo engaged in off-region loans amounting to approximately 37.2149 trillion won (111,652 cases) based on the contractual amount from 2020 to 2024.
By year, the amount surged from 6.7748 trillion won in 2020 to 12.5680 trillion won in 2021, before decreasing to 11.1024 trillion won in the following year, 2022. After experiencing a bank run in 2023, it plummeted to 2.0826 trillion won, but rebounded to 4.6869 trillion won last year. This year, the Saemaul Geumgo has already contracted 1.9561 trillion won in off-region loans in just the first half.
The problem is that excessive off-region loan practices can lead to poor loans. It is difficult to properly understand the economic conditions and risks of areas outside the region, leading to inadequate loan screening, and the distance makes it easier to create false documentation due to limits on information verification.
The Saemaul Geumgo Central Association will completely suspend off-region loans for a credit union if its off-region loans exceed 33% of the new loan amount for that year in the following quarter.
However, over the past five years, 272 credit unions have exceeded the cumulative handling ratio of off-region loans based on year-end balances of 33%. One of these credit unions had off-region loans amounting to 87.1% of new loans in 2021.
Rep. Heo Young stated, "The Saemaul Geumgo must fulfill its responsibilities as it has avoided the transfer of financial supervision authority under the pretext of being a community-based financial institution for the common people."