Individual Borrower Credit Exposure Limit Increased by 20% for Large Savings Banks

Amendment to the Enforcement Decree of the Mutual Savings Banks Act Passed at the Cabinet Meeting

[Asia Economy Reporter Kwangho Lee] Reflecting the increase in loan scale of savings banks, the individual borrower credit limit for large savings banks with assets exceeding 1 trillion won will be increased by 20%. If a savings bank exceeds the securities investment limit due to asset price fluctuations, a disposal period of up to one year will be granted to resolve this.

The Financial Services Commission announced on the 20th that the "Amendment to the Enforcement Decree of the Mutual Savings Banks Act," which includes these provisions, passed the Cabinet meeting and will take effect from the 27th.

Currently, the credit limit for savings banks is uniformly set regardless of asset size within 20% of their own capital: 800 million won for individuals, 5 billion won for individual business operators, and 10 billion won for corporations. The amendment increases the credit limit by 20% for savings banks with assets over 1 trillion won to 12 billion won for corporations and 6 billion won for individual business operators, considering the increase in loan scale of savings banks.

Additionally, if a savings bank exceeds the investment limit (own capital) due to fluctuations in securities prices, a disposal period of up to one year will be granted to resolve this. Previously, there was an issue of having to dispose immediately as no separate disposal period was granted.

Legal grounds have also been established for approval review criteria regarding dissolution and merger of savings banks. Until now, there were no separate review criteria, and operations were conducted by referring to cases in other financial sectors.

Exemption reasons for reporting will also be specified. Individual savings banks must report to the Financial Services Commission when changing their articles of incorporation or business manuals, but the reporting obligation is exempted if it is a "minor matter specified in the enforcement decree."

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