Participated in the Mutual Finance Policy Council Chaired by the Vice Chairman of the Financial Services Commission on the 22nd
Saemaul Geumgo announced on the 29th that, through the “Mutual Finance System Improvement Plan,” it will actively pursue efforts to restore its identity as a financial cooperative serving local communities and ordinary citizens, as well as to improve its institutional framework.
To this end, on the 22nd, Saemaul Geumgo participated in the Mutual Finance Policy Council, chaired by the Vice Chairman of the Financial Services Commission, to actively discuss the “Mutual Finance System Improvement Plan” and share key issues to fulfill its role as a regional financial institution.
Saemaul Geumgo plans to proactively adopt measures discussed at the meeting, including enhancing the risk management capabilities of the central association, strengthening the soundness management of individual cooperatives, improving the loan portfolio, and advancing governance and internal controls, in order to ensure sound management of Saemaul Geumgo.
Since the withdrawal crisis in 2023, Saemaul Geumgo has gradually implemented institutional improvements for comprehensive management reform and the restoration of customer trust, based on the “Saemaul Geumgo Management Innovation Plan” developed by the Management Innovation Advisory Committee, which included Saemaul Geumgo and private sector experts and was led by the Ministry of the Interior and Safety.
Among these, the plan to raise the minimum net capital ratio standard to 4% in order to strengthen the soundness of individual cooperatives, as part of the recent “Mutual Finance System Improvement Plan,” has been introduced through the Saemaul Geumgo Act and related regulations.
Additionally, in accordance with the management innovation plan, measures to strengthen the management of joint loans-such as requiring prior review by the central association for large-scale joint real estate loans to ensure systematic risk management-were preemptively incorporated into internal regulations last year.
Furthermore, to prevent the circumvention of term limits and the improper long-term tenure of individual cooperative presidents, a regulation to prevent evasion of reappointment restrictions was first introduced and implemented in the mutual finance sector in 2023.
In addition, among the issues discussed at the recent Mutual Finance Policy Council, Saemaul Geumgo will gradually raise the central association’s management guidance ratio (capital adequacy ratio) to 7%, the same level as savings banks, to enhance risk management at the central level. The institution will also strengthen internal controls across all lending operations by computerizing the loan process to prevent improper or fraudulent loans.
Moreover, to improve the practice of concentrating loans in real estate and collateral-backed lending, Saemaul Geumgo plans to apply a 110% risk weight to real estate and construction loans when calculating the net capital ratio, limit project finance loans to 20% of total loans, and, in cooperation with the Ministry of the Interior and Safety, strengthen requirements for appointing full-time auditors and enhance external accounting audits to further increase operational transparency.
Kim In, Chairman of the Saemaul Geumgo Central Association, stated, “Saemaul Geumgo is pursuing fundamental structural reforms in close cooperation with the Ministry of the Interior and Safety and financial authorities to fulfill its core function as a financial institution for ordinary citizens,” adding, “Going forward, Saemaul Geumgo will continue to become a trusted financial institution that provides tangible support to local communities and the grassroots economy.”
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