Errors Found Throughout Savings Bank Depositor Protection System

Preliminary Maintenance Check of Savings Bank Depositor Information System
5 Out of 11 Networks Show Average 5.4% Errors

[Asia Economy Reporter Song Seung-seop] It has been revealed that savings banks have lax management of their depositor information pre-maintenance systems. However, there are calls to establish legal grounds as there are no enforcement measures to mandate the obligation of pre-maintenance of depositor information.

According to the document titled “Special Inspection of Depositor Information Pre-Maintenance System and Integrated Summary Information System (IRIS) Self-Inspection Results Report” prepared by the Korea Deposit Insurance Corporation on the 16th, among the 11 savings banks using individual networks, an average error rate of 5.4% was detected in 5 of them.

The depositor information pre-maintenance system enables the Korea Deposit Insurance Corporation to promptly pay deposit insurance within 7 days, instead of the minimum 4 months or more it used to take when business was suspended. It was established starting with savings banks in 2016 and later expanded to banks and others.

This inspection was conducted to verify whether the relevant information was properly managed in savings banks amid financial market instability caused by the prolonged COVID-19 pandemic. After obtaining depositor information in a standard format from 67 savings banks using the central association’s joint network and 12 savings banks using individual networks, the submitted data’s consistency was verified using a checklist. One company using an individual network was excluded due to system upgrades.

Average Error Rate of 5.4% in 5 Savings Banks

The inspection results showed no issues in savings banks using the joint network and 6 savings banks using individual networks, but errors were found in the remaining 5 banks.

In the case of Company A, it was revealed that the agreed interest rate was applied instead of the rate set by the Korea Deposit Insurance Corporation when paying deposit insurance. Company B entered the income tax rate (14%) instead of the local income tax rate (1.4%), and Company C had inconsistencies or missing necessary information in 7 standard format items, making verification impossible.

The Korea Deposit Insurance Corporation attributed these causes to the absence of maintenance and management personnel for the pre-maintenance system. A corporation official explained, “The scale of deposit products, number of branches, and number of employees were found to have little correlation with the error rate,” adding, “Savings banks with lower understanding and cooperation levels of the person in charge generally showed higher error rates.”

The problem is that despite repeated poor management of the depositor protection system centered on some savings banks every year, there are no proper means to induce corrective actions. This is because there is no legal basis for the obligation of pre-maintenance of depositor information. A Korea Deposit Insurance Corporation official lamented, “Since there are no legal enforcement measures, it is difficult to demand error corrections from savings banks even if they do not cooperate with inspections.”

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