Meeting of Mutual Financial Association Heads on September 19
Strengthening Internal Controls to Prevent Embezzlement and Improper Lending
Guidance on Resolving Non-Performing PF Loans to Restore Soundness
On September 19, Lee Chanjin, Governor of the Financial Supervisory Service, held a meeting with the heads of mutual finance central associations at the National Agricultural Cooperative Federation in Jung-gu, Seoul, urging them to strengthen internal controls to prevent financial accidents such as embezzlement and improper lending. He also emphasized the need to quickly resolve non-performing real estate project financing (PF) loans to enhance the soundness of the sector.
Lee Chanjin, Governor of the Financial Supervisory Service, is delivering opening remarks at the 'Financial Supervisory Service Governor-Big Tech CEO Meeting' held at Naver Square Yeoksam in Gangnam-gu, Seoul on the 11th. 2025.9.11 Photo by Kang Jinhyung
The meeting was attended by Kang Hodong, President of the National Agricultural Cooperative Federation; Kim Yunsik, President of the National Credit Union Federation; Noh Dongjin, President of the National Federation of Fisheries Cooperatives; and Choi Changho, President of the National Forestry Cooperative Federation. Governor Lee stated, "Financial accidents such as embezzlement and improper lending continue to occur at local cooperatives," and called for improvements to internal operating systems, the establishment of effective control systems, and the resolution of non-performing PF loans.
He specifically pointed out that although the National Agricultural Cooperative Federation, the National Federation of Fisheries Cooperatives, and the National Forestry Cooperative Federation are not subject to the Financial Consumer Protection Act, they should establish consumer protection systems equivalent to those in other financial sectors. He said, "Even before the legal framework is revised, you must have mechanisms in place to protect consumer rights, provide policy-based loan guidance appropriate to the situation, and offer prompt debt adjustment support."
He also requested active participation in the ongoing efforts by the Financial Supervisory Service to improve internal controls over credit-related work. Governor Lee emphasized, "The central associations should take the lead in establishing computerized internal control systems to prevent improper lending and loan fraud," adding, "Strengthen IT management and control procedures throughout the entire credit process."
Additionally, he urged them to develop niche markets that large financial companies find difficult to enter, in order to enhance the funding capabilities of local cooperatives, and to focus on upgrading infrastructure such as credit evaluation systems and mobile platform improvements.
Regarding the resolution of non-performing PF loans, he said, "Recently, delinquency rates have been rising and profitability has been deteriorating due to defaults on real estate development loans," and added, "We will strengthen guidance and supervision to ensure that cooperatives can swiftly resolve non-performing assets through active sales and write-offs."
The central association presidents introduced measures to prevent financial accidents, such as 24-hour monitoring for voice phishing and the operation of secure blocking services for credit transactions, and requested institutional support, noting that local cooperative management has become more challenging due to regional economic downturns and population aging.
Governor Lee stated, "We will thoroughly review your suggestions and reflect them in future supervisory and inspection work," adding, "We will continue to communicate with the mutual finance sector and develop institutional improvements going forward."
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