Deposit Insurance Limit Raised to 100 Million Won, Effective September 1

Second-tier Financial Institutions, Including Mutual Finance,
to Also See Simultaneous Increase

Starting September 1, the deposit insurance limit will be raised from the current 50 million won to 100 million won. This is the first increase in the deposit insurance limit in 24 years since 2001.

The Financial Services Commission announced on July 22 that six presidential decrees, including the amendment to the Enforcement Decree of the Depositor Protection Act to increase the deposit insurance limit, were approved at a Cabinet meeting and will take effect starting in September.

The deposit insurance limit will be raised to 100 million won not only for banks, savings banks, insurance companies, and financial investment sectors protected by the Korea Deposit Insurance Corporation, but also for mutual finance institutions protected by their respective central associations under individual laws.

Accordingly, after September 1, if a financial institution or mutual finance cooperative or credit union faces bankruptcy or is otherwise unable to pay deposits, depositors will be protected up to 100 million won.

Principal-guaranteed products such as savings and time deposits will be protected up to 100 million won, including both principal and interest, regardless of when the deposit was made. Products whose payouts are linked to investment performance, such as funds, will not be covered.

In addition, considering their social security nature, retirement pensions, pension savings, and accident insurance payouts, which have separate protection limits from ordinary deposits, will also be protected up to 100 million won.

Meanwhile, the financial authorities, together with relevant agencies, will monitor the market impact of the increased deposit insurance limit. As depositors may reallocate their funds to financial institutions offering relatively higher interest rates, some financial institutions may face liquidity or soundness challenges, so authorities are closely monitoring deposit balances and related indicators.