"Korean Federation of Community Credit Cooperatives (KFCC) has 70% of its cooperatives outside the greater Seoul area, offering strong local accessibility. Building on this, we will expand the share of finance for small business owners and other low-income people, and become a financial pathway that social and economic corporations can turn to."
KFCC Chairman Kim In, who is running in the 20th chairman election, stated accordingly in a written interview with ChosunBiz about the direction KFCC should take. He again emphasized KFCC's founding purpose of not only providing financial services nationwide but also coexisting and cooperating with local communities.
The KFCC will elect the next chairman through a vote on the 17th of this month. The chairs of 1,262 cooperatives nationwide will gather at the MG Talent Development Institute in Cheonan, South Chungcheong, to cast their votes in person. Chairman Kim In, Yoo Jae-chun, chair of the Seoul Livestock KFCC, and Jang Jae-gon, chair of the Jongno Square KFCC, are running as candidates.
The KFCC chair had been allowed one reelection for a four-year term, but under the revised KFCC Act that took effect in Jan., it was changed to a single four-year term. Chairman Kim, who was elected in a by-election in Dec. 2023, serves until Mar. next year, and if elected this time, will be the last chairman eligible for reelection.
Kim said he will lead an inclusive finance policy stance by leveraging KFCC's local network to strengthen cooperation with cooperatives and village corporations. KFCC operates about 400 branches in 89 areas designated by the Ministry of the Interior and Safety as experiencing population decline.
Kim pledged to expand policy fund lending, lower the lending rate for low-credit borrowers, and increase lending to vulnerable groups. He also proposed creating a 4 trillion won "KFCC management rationalization fund" to support cooperative mergers. He promised to establish an organization to develop future revenue sources and create a channel for constant communication between the 1,262 cooperatives and the federation. The following is a Q&A with Chairman Kim.
―What are your achievements while in office?
"I have never once set down the heavy responsibility of returning to being a friend of the common people. Over the past year, we returned 70 billion won to local communities through social contribution projects. We also established the KFCC Asset Management Company and made soundness our top priority, lowering the delinquency rate from 8.37% in June to 6.78% in Sept."
―What are you disappointed about?
"It is true that I worry that adjusting the tax exemption benefits for deposits and investment could weaken the competitiveness of mutual finance institutions and negatively affect asset building for financially vulnerable groups. Most members of mutual finance institutions are ordinary people. Since its introduction in 1976, the tax exemption has supported finance for the common people for 50 years."
―What is the solution to weak internal controls, such as illegal or preferential lending?
"We plan to digitize the supervision of 1,262 cooperatives to detect warning signs before financial accidents occur. The federation will develop a big data-based risk assessment model, and each cooperative will use it to build its own risk assessment system. We have suffered from staff shortages because we have inspected and supervised 3,223 branches nationwide on a two-year cycle. Digitizing the entire inspection process will dramatically improve productivity and the ability to prevent accidents."
―What is your position on transferring supervisory authority?
"For KFCC to contribute to revitalizing local economies through regional coexistence and cooperation, close coordination with the Ministry of the Interior and Safety, which oversees local governments, is essential. We will also continue high-intensity restructuring of insolvent cooperatives and efforts to strengthen internal controls in coordination with the financial authorities."
―What are KFCC's future growth drivers?
"We will do our best to establish a provisional Future Growth Research Institute to expand our revenue structure and business scope. Drawing on KFCC's spirit of mutual aid, we will further solidify a win-win network in which large cooperatives in the greater Seoul area support small regional cooperatives."