San-eun Launches 'No.1' New Deal Deposit... Lukewarm Industry Response Amid Deposit Product Neglect

In the Atmosphere of 'Sold Out' for the People's Participation Policy-Type New Deal Fund,
KDB Launches the 'No. 1' New Deal Deposit

[Asia Economy Reporter Park Sun-mi] While the National Participation Policy-type New Deal Fund has gained popularity, with some funds being 'sold out' on the first day of sales on the 29th, the banking industry has also launched the first New Deal time deposit. However, in an era of low interest rates where bank deposit products are being ignored by consumers, it is uncertain whether follow-up New Deal deposit products will be released by banks.

According to the financial sector on the 30th, KDB Industrial Bank launched the 'first' New Deal time deposit the day before and began sales at branches and online. This deposit, named the 'Green New Deal Time Deposit,' is the first New Deal time deposit offered by Industrial Bank and will be sold until May 10. The launch date was also aligned with the 29th, when 15 financial companies simultaneously began selling the National Participation New Deal Fund.

Currently, Industrial Bank is the only bank offering New Deal deposits. Financial consumers who want to participate directly or indirectly in the Korean New Deal policy can choose between subscribing to the National Participation New Deal Fund, which has a 4-year closed structure with no early redemption at this time, or taking out a New Deal deposit that matures after one year.

The Green New Deal Time Deposit, designed with a total scale of 3 trillion won, has the advantage of a shorter maturity period compared to the New Deal fund. The interest rate is also set the highest among currently sold deposit products. The structure offers higher interest rates as the total sales amount increases; if subscribed at a branch, the maximum annual interest rate is 1.30%, and through online non-face-to-face channels, it can reach up to 1.35%.

As a leading policy financial institution in Korea, Industrial Bank put considerable effort into this product, which was the first to carry the New Deal label. Besides setting the highest interest rate among recently launched deposit products, Chairman Lee Dong-geol of Industrial Bank became the 'first' subscriber.

After subscribing, Chairman Lee said, "Industrial Bank, which has led Korea's economic development for the past 67 years, is now pushing for a major role transformation as a policy financial institution leading the Korean New Deal and green finance," and added, "I hope many citizens will join Industrial Bank on the journey to find new growth engines for Korea." The funds collected through this product will be used as resources for the Korean New Deal and green finance policies. In line with the purpose of attaching the 'New Deal' label to the deposit product, Industrial Bank plans to carry out ESG (Environmental, Social, and Governance) social contribution activities linked to the sales amount.

Will Industrial Bank's New Deal Deposit Signal Follow-up Releases in the Banking Sector?

However, the impact of the New Deal time deposit on the banking sector is viewed with caution.

Although the four major financial holding companies have declared their active participation in the government's New Deal policy, no deposit products with the 'New Deal' label have appeared in commercial banks. Industry insiders find it rather surprising that Industrial Bank launched a New Deal deposit amid a situation where deposit interest rates are continuously falling and consumers are turning away. There is talk that it may be difficult for follow-up New Deal deposit products to emerge in the banking sector.

Among the 49 time deposit products from 18 banks disclosed by the Korea Federation of Banks, excluding Industrial Bank's New Deal time deposit, the product offering the highest current interest rate is K Bank's Code K Time Deposit (1.30%). Only 13 products, about 30%, offer a base interest rate in the 1% range, while the rest provide interest rates in the 0% range. Most of the 1% range interest rates are offered by internet banks, policy banks, regional banks, or foreign banks.

A representative from a commercial bank explained the banking sector's reluctance to launch New Deal time deposits by saying, "Since the first New Deal fund is essentially a product where the principal is largely guaranteed, consumers who want to participate in the New Deal policy are naturally drawn to funds that offer principal protection and higher return opportunities rather than low-interest deposit products."

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