Exclusion of Deposit-Backed Loans and Insurance Policy Loans in Deposit Insurance Premium Calculation
[Asia Economy Reporter Kim Hyo-jin] Going forward, deposit collateral loans and insurance policy loans will be excluded from the calculation basis for deposit insurance premiums that financial companies pay to the Korea Deposit Insurance Corporation. As a result, the burden of deposit insurance premiums on financial companies will be somewhat reduced.
The Financial Services Commission announced on the 16th that the amendment to the Enforcement Decree of the Depositor Protection Act containing this content has passed the Cabinet meeting.
The Financial Services Commission explained, "Considering that deposit collateral loans and insurance policy loans are deducted from the deposit insurance payout amount, there is no risk of insurance payout."
The calculation basis for the reserve liabilities of the insurance sector, which is subject to deposit insurance premiums, has been changed from the year-end balance to the average annual balance. While other financial sectors use the average annual balance, only the insurance sector used the year-end balance, resulting in a heavier insurance premium burden.
The Financial Services Commission plans to adjust the improvements in the deposit insurance premium imposition criteria so that they do not affect the repayment of funds invested in past financial company insolvency resolutions.
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The Financial Services Commission stated, "Due to changes in the financial market and regulatory environment, demands for improvements related to the deposit insurance system, such as the deposit insurance premium imposition system, have been raised by the National Assembly and academia. In particular, the financial sector has continuously requested rationalization of the imposition criteria," adding, "We will review tasks that require in-depth discussion due to the basic framework of the deposit insurance system and the diverse related stakeholders in the future."
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