Banks and Insurance Companies Also Required to Contribute to Microfinance... Microfinance Act Amendment Passed at Cabinet Meeting

Dormant Deposit Contribution, Reorganized into 'Dormant Financial Assets' Transfer System

[Asia Economy Reporter Kim Hyo-jin] Financial companies obligated to contribute to microfinance will be expanded from mutual finance and savings banks to all financial companies handling household loans. Additionally, the dormant deposit contribution system will be restructured into a 'dormant financial assets transfer system' to encompass a wider range of financial assets.

The Financial Services Commission announced that the amendment to the Microfinance Act containing these provisions passed the Cabinet meeting on the 15th.

Accordingly, financial companies obligated to contribute to the Korea Inclusive Finance Agency will be expanded to include all financial companies handling household loans, such as banks, insurance companies, and specialized credit finance companies. Detailed contribution standards, rates, and procedures will be delegated to subordinate legislation.

The amendment also includes restructuring the current dormant deposit contribution system, which targets deposits with expired statutes of limitations, into a 'dormant financial assets transfer system' that transfers and manages long-term inactive financial assets.

To this end, the term 'dormant deposit' has been changed to 'dormant financial assets.'

Dormant financial assets will include the current contribution targets (dormant deposits, insurance money, proceeds from cashier's checks, and dividends from lost stocks) plus investor deposits that customers have not claimed for over 10 years since the last transaction.

After the transfer of dormant financial assets, the obligation to return them to customers will be borne by the Korea Inclusive Finance Agency, not the financial companies.

The Korea Inclusive Finance Agency may use only the operating income from dormant financial assets as microfinance resources, and the prohibition on using the principal has been explicitly codified.

The amendment also includes measures to protect the rights holders of dormant financial assets.

Before the transfer, the number of customer notifications by financial companies will increase (from once to twice), and the notification threshold will be lowered (from over 300,000 KRW to over 100,000 KRW). After the transfer, the Korea Inclusive Finance Agency's activities to locate rightful owners will be made mandatory.

Explicit prohibitions against illegal loans impersonating the Microfinance Integrated Support Center or government financial support have been established, with penalties of up to 10 million KRW in fines for violations.

The Financial Services Commission plans to submit the bill to the National Assembly within this month.

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