[Asia Economy Reporter Bu Aeri] As incidents related to high-interest savings and deposits repeatedly occur in regional agricultural cooperatives, credit unions, and other mutual financial institutions, financial consumers' anxiety continues to persist.
According to the financial sector on the 5th, Naesu Credit Union located in Cheongju, Chungbuk, made pleading phone calls to customers asking them to limit the amount of savings deposits. Some customers received messages such as "Please deposit only up to the depositor protection fund limit of 50 million KRW" or "Please limit to 10 million KRW." A credit union official said, "Since this product could be subscribed online without any subscription limit, demand surged, and we contacted customers to adjust the amounts." The credit union has currently closed all channels for online subscriptions.
Last month, Naesu Credit Union conducted non-face-to-face subscriptions for the 'Union Free Savings' product with an annual maximum interest rate of 6.15% (based on 36 months). Interest in high-interest products has recently increased, leading to a flood of subscribers for this product, and the credit union explained that the unexpectedly large influx of funds made it difficult to cover the interest. The credit union's asset size was about 146.3 billion KRW as of the first half of last year.
Such controversies repeatedly occur in mutual financial institutions like credit unions and agricultural cooperatives. Last month, Hapcheon Nonghyup and Namhae Livestock Nonghyup in Gyeongnam, and Donggyeongju Nonghyup in Gyeongbuk pleaded with customers to cancel their savings deposits. In the case of Donggyeongju Nonghyup, it faced a bankruptcy crisis after receiving 900 billion KRW, which is 90 times the initial target amount of 10 billion KRW. Jeju Sara Credit Union also offered a free installment savings product with an annual interest rate of 7.5%, but after tens of billions of KRW flooded in, they requested customers to cancel their deposits.
Previously, each central association set sales limits for savings and deposits through a special sales management system and decided to automatically restrict additional sales when limits are exceeded to prevent similar incidents. Regarding this, a representative from the National Credit Union Federation said, "Although this product was not a special sale, we will prepare recurrence prevention measures at the central association level to ensure similar cases do not happen again."
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