Sunset Imminent: '0.5% Forecast Fee Rate' Extended Until 2027

Amendment to the Depositor Protection Act Passed in the National Assembly Plenary Session
Ensuring Fund Stability Without Reducing Deposit Insurance Premium Revenue

The sunset date for the deposit insurance premium rate cap (0.5%), which was set to expire at the end of August, has been extended to the end of 2027.

According to the Financial Services Commission on the 28th, the amendment to the "Depositor Protection Act" extending the current deposit insurance premium rate cap (0.5%) expiration date from August 31 of this year to December 31, 2027, has passed the National Assembly plenary session.

The Depositor Protection Act sets the premium rate cap for accumulating the deposit insurance fund to prepare for financial insolvencies at within 0.5% for all financial sectors, and delegates the authority to set specific premium rates for each sector to the Presidential Decree. If the expiration date of the deposit insurance premium rate cap passes, the deposit insurance premium rates for banks, financial investment, and mutual savings banks sectors would fall back to levels before September 1998, which could reduce the income of the deposit insurance fund used for financial company crisis response, thereby lowering the stability of fund operations.

With this amendment and its enforcement, the current deposit insurance premium rate will be maintained, allowing the smooth repayment of savings bank restructuring costs (45% of the deposit insurance premiums) and enabling the expansion of resources to stabilize the financial market. In particular, the amendment to the Depositor Protection Act applies from the deposit insurance premiums collected during the period in which the amendment takes effect, preventing any decrease in deposit insurance premium income during the period from September 1 to the amendment enforcement date, even if enforcement occurs after the existing expiration period.

Going forward, the Financial Services Commission and the Korea Deposit Insurance Corporation plan to operate the deposit insurance fund stably according to the amended Depositor Protection Act and further enhance the financial market resilience of the depositor protection system.

This amendment to the Depositor Protection Act will be implemented immediately after the government transfer and promulgation procedures are completed.