Shinhyup Loan Territory to Match Saemaeul Geumgo Level... Legislative Notice for Amendment of Shinhyup Act Enforcement Decree

[Asia Economy Reporter Kangwook Cho] The loan service area of credit cooperatives will be expanded to the level of Saemaeul Geumgo. The business area, which was limited to 226 cities, counties, and districts nationwide, will be reorganized into 10 zones, allowing even non-members to receive loans.

The Financial Services Commission announced on the 3rd that it will publicly announce the amendment of the Enforcement Decree of the Credit Cooperatives Act and the Mutual Finance Business Supervision Regulations, which focus on this content, until the 12th of next month to resolve the difficulties in fund management of credit cooperatives (Shinhyup) and activate the financial functions for ordinary citizens.

According to the amendment, restrictions on loans to non-members will be eased. The country will be divided into 10 zones, and loans within the same zone will be regarded as member loans. The 10 zones are Seoul, Incheon-Gyeonggi, Busan-Ulsan-Gyeongnam, Daegu-Gyeongbuk, Daejeon-Sejong-Chungnam, Gwangju-Jeonnam, Chungbuk, Jeonbuk, Gangwon, and Jeju. Loans outside the zone will be limited to one-third or less. This is similar to the level of Saemaeul Geumgo. Currently, Saemaeul Geumgo divides the country into 9 zones and limits loans outside the zone to one-third or less.

The requirements for expanding joint solidarity have also been relaxed. For 'full expansion,' which expands joint solidarity to one adjacent city, county, or district, the asset requirement of 100 billion won or more has been abolished in the amendment of the enforcement decree. Through this, small and medium-sized cooperatives with excellent financial soundness and performance in financial services for ordinary citizens can also expand joint solidarity to one adjacent city, county, or district.

For 'partial expansion,' which expands joint solidarity to up to three adjacent neighborhoods (dong) or up to two towns (eup) or townships (myeon), the approval scope has been rationalized. Regardless of the location of the main office, cooperatives can expand joint solidarity to some eup, myeon, or dong in other cities, counties, or districts adjacent to the city, county, or district to which the cooperative belongs. However, as loan regulations are eased, mutual finance cooperatives and central associations are also required to strengthen credit screening, post-management, and financial accident prevention measures, similar to banks and savings banks.

The Financial Services Commission plans to publicly announce the amended bill from July 3 to August 12, and after final consultations and procedures with related ministries, it will revise and implement it. In addition, through research projects and consultations with related organizations this year, various institutional improvement measures for the sound development of credit cooperatives will be prepared, and related legal amendments will be promoted.

This content was produced with the assistance of AI translation services.