The Ministry of the Interior and Safety said on the 8th it will conduct a joint inspection of the Korean Federation of Community Credit Cooperatives (KFCC) with the Korea Deposit Insurance Corporation (KDIC) and the Financial Supervisory Service.
Fifty-seven institutions were selected for inspection based on arrears rate, the share of loans to real estate and construction businesses, potential default risk, and the urgency of inspection. This is a sharp increase from last year's 32, and the government plans to inspect 35 cooperatives in the first half.
For the selected cooperatives, authorities will review arrears rate, losses, and liquidity management to guide improvements in management performance.
They also plan to examine internal controls, including problematic loans such as deliberately favorable lending and workplace power abuse or sexual misconduct.
To strengthen oversight of household loans, they will thoroughly review household lending practices, and strictly take action against KFCC executives and employees who violate government measures and internal rules.
To toughen sanctions, starting this year, if executives or employees are found to have acted intentionally or with gross negligence, they will face disciplinary action regardless of whether losses or incidents occurred.
If a Korean Federation of Community Credit Cooperatives (KFCC) branch given a corrective order fails to comply for more than six months, the KFCC federation will conduct a separate inspection and, if willful noncompliance is confirmed, will take strict action against the responsible executives and employees.
For KFCC branches that acquire troubled cooperatives, the Korea Deposit Insurance Corporation (KDIC) and the KFCC federation will jointly support investigations into the causes of insolvency and provide management consulting to normalize operations.
Minister Yoon Ho-jung of the Ministry of the Interior and Safety (MOIS) said, "In line with the government's policy stance to stabilize the real estate market, we will strengthen management of household loans at the Korean Federation of Community Credit Cooperatives (KFCC)," adding, "We will ensure the KFCC firmly takes its place as a local community finance institution serving ordinary residents."