Savings Bank Branch Installation, Shift from Approval to Notification System... Improvement in Scope of Concurrent Business Operations

Reviewed 140 Regulations under Two Laws Including the Mutual Savings Banks Act and the Loan Business Act, Improving 17 Cases
Plan to Submit Legislative Amendments within the Year for Savings Banks Act and Loan Business Act Improvement Tasks

[Asia Economy Reporter Kangwook Cho] The approval system for savings banks to establish branches will be changed to a notification system, and the scope of concurrent business and individual borrower credit limits will be expanded.

On the 3rd, the Financial Services Commission held the 4th plenary meeting of the Regulatory Verification Committee and reviewed 140 regulations under two laws, the Mutual Savings Banks Act and the Loan Business Act, deciding to improve 17 of them.

First, regulations on the establishment of savings bank branches will be eased. Currently, savings banks must obtain approval from the FSC when establishing branches and offices. Considering fairness with other financial sectors such as banks, the FSC decided to actively review changing the branch establishment within the savings bank’s business area from the current approval system to a notification system.

Additionally, the scope of concurrent business for savings banks will be defined by enforcement ordinances to allow freer pursuit of new business activities. Until now, the law has listed these activities restrictively, making it difficult to reflect new business operations.

The credit limit for individual borrowers will also be expanded. Currently, the credit limit for individual borrowers of savings banks is set within 20% of their capital: 800 million KRW for individuals, 5 billion KRW for individual business owners, and 10 billion KRW for corporations. The FSC plans to reasonably adjust the individual borrower credit limits considering the asset size and financial soundness of savings banks.

The obligation to dispose of non-business real estate will be explicitly stated in the law, and the joint liability burden of savings bank executives will be eased.

Regarding the Loan Business Act, regulations will be strengthened to reduce damage from illegal private loans. The interest rate charged by illegal private lenders will be limited from 24% per annum to 6%, and increased delinquency interest, refinancing, and undocumented loan contracts will be invalidated. The use of internet bulletin boards for illicit loan brokerage will also be regulated, and penalties will be established for advertisements impersonating community finance institutions.

The FSC plans to submit legislative improvement bills to the National Assembly within this year and to push for amendments to enforcement ordinances unrelated to legal revisions also within this year.

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