"Bank Deposits Protected Up to 100 Million Won"...Effective from September 1

Financial Services Commission Announces Amendment to the Depositor Protection Act
Deposit Protection Limit Raised to 100 Million Won for Saemaeul Geumgo and Other Mutual Finance Institutions
Retirement Pensions, Pension Savings, and Insurance Payouts Also Increased to the Same Limit

Starting in September, the deposit protection limit will be raised to 100 million won. As a result, the protection limits for banks, as well as credit unions, agricultural cooperatives, fisheries cooperatives, forestry cooperatives, Saemaeul Geumgo, retirement pensions, pension savings, and insurance payouts will also be increased.

The Financial Services Commission announced that it will conduct a legislative notice for the "Presidential Decree on Partial Amendments to Six Laws to Raise the Deposit Protection Limit" from May 16 to June 25. After passing a Cabinet meeting, the new system is scheduled to be implemented from September 1.

From September 1, 2025, if a financial institution or mutual finance cooperative or credit union is unable to pay out deposits due to bankruptcy or other reasons, deposits will be protected up to 100 million won.

Before the foreign exchange crisis at the end of 1997, Korea operated deposit protection limits for each financial sector, ranging from 10 million won to 50 million won. During the foreign exchange crisis, full deposit protection was temporarily implemented for all financial sectors.

To address moral hazard caused by full deposit protection, the deposit protection limit was set at 50 million won starting in 2001. The Financial Services Commission explained that the limit has now been raised, taking into account the growth of the economy and the increase in deposit assets.

Under the Depositor Protection Act, the deposit protection limit for mutual finance sectors?where deposits are protected by individual central associations under their respective laws, as well as for banks and savings banks protected by the Korea Deposit Insurance Corporation?will also be raised to 100 million won.

Additionally, the deposit protection limits for retirement pensions, pension savings (mutual aid), and insurance payouts (mutual aid payments), which are subject to separate protection limits from general deposits, will also be raised to 100 million won, considering the social security nature of these products and the trend of increasing scale of operation.

Meanwhile, the Financial Services Commission and the Korea Deposit Insurance Corporation plan to review the appropriate deposit insurance premium rates in response to the increase in protected deposits. However, taking into account that the financial sector is still bearing the costs incurred to resolve past financial insolvencies, the new deposit insurance premium rates will be applied starting from the premiums due in 2028.