[Exclusive] Illegal Loans Rampant in Shinhyup, Nonghyup, and Suhyup... Over 480 Billion Won in Excess Loans

[Asia Economy Reporter Bu Aeri] It has been revealed that illegal loans violating regulations are still widespread in the mutual finance sector, which has been under national criticism due to various fraudulent acts by executives and employees. The amount of excess loans reached approximately 480 billion KRW.

According to the Financial Supervisory Service's 'Mutual Finance Sector (Credit Unions, Nonghyup, Suhyup) Sanction Measures' data obtained by Asia Economy on the 1st through the office of Hong Seong-guk, a member of the Democratic Party of Korea, there were 77 cases of illegal loans sanctioned in the mutual finance sector over the past five years from 2017 to June this year. Credit Unions had the highest number with 44 cases, followed by Nonghyup with 28 cases, and Suhyup with 5 cases.

Illegal loans in the mutual finance sector refer to violations such as exceeding the loan limit for the same individual, loan limits for executives and employees, and loan limits for non-members. For example, under the Credit Union Act, the loan limit for the same individual must be handled within 20% of the capital and 1% of total assets. Regarding the loan limit for non-members, according to the Credit Union Act, it cannot exceed one-third of the loans handled in the relevant business year (for Nonghyup, it is half). The regulations of other mutual finance sectors are generally similar. If these laws or internal regulations of each cooperative are violated, the Financial Supervisory Service imposes sanctions such as warnings or cautions. Additionally, the excess loan amounts are subject to recovery measures.

By violating laws or regulations and allowing excess loans, it was found that about 480 billion KRW was additionally loaned over the past five years. From 2017 to June this year, the excess loan amounts for Credit Unions, Nonghyup, and Suhyup totaled 478.2 billion KRW. Credit Unions accounted for the largest portion with 368.6 billion KRW, followed by Nonghyup with 102.4 billion KRW, and Suhyup with 7.2 billion KRW. In particular, in the case of Credit Unions, it was detected that more than 200 billion KRW was additionally loaned due to violations of the non-member loan limit in two cooperatives this year. This figure is more than 109 times the previous year's amount (1.9 billion KRW).

Embezzlement and breach of trust issues by executives and employees also remain chronic. From 2017 to June this year, there were a total of 171 embezzlement and breach of trust incidents in Credit Unions, Nonghyup, and Suhyup. An average of 30 cases occurred annually, and 17 cases were recorded in just the first six months of this year. Nonghyup had the highest number of embezzlement and breach of trust cases with 79, followed by Credit Unions with 72, and Suhyup with 20. The total embezzled amount was 26 billion KRW, with Nonghyup at 11.3 billion KRW, Credit Unions at 7.7 billion KRW, and Suhyup at 7 billion KRW.

Representative Hong stated, "Since the supervisory authorities of the mutual finance sector are different, the lack of consistency in regulation and supervision has been a long-standing problem," and added, "The government should actively step in to eliminate blind spots in supervision and prepare support measures to respond to recent financial crises such as high interest rates."

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