'Preventing Bank Runs'... Seoul Saemaeul Geumgo Significantly Raises Capital Contribution to 2 Billion Won

Amendment to the Enforcement Decree of the Saemaeul Geumgo Act Passed at the Cabinet Meeting

The threshold for establishing Saemaeul Geumgo is being raised. The capital contribution requirements necessary for establishment will be gradually increased, with plans to strengthen them by 3 to 5 times compared to the current standards starting in 2028. This measure is interpreted as a way to alleviate concerns about the unusual bank run (massive withdrawal of deposits) that arose amid financial market crisis rumors despite the asset size reaching 300 trillion won, and to further enhance financial soundness.

The Ministry of the Interior and Safety announced that the amendment to the "Saemaeul Geumgo Act Enforcement Decree," which includes these details, passed the Cabinet meeting on the 5th.

An "Information Notice Regarding Deposit Protection" is posted at the MG Saemaeul Geumgo Gyeonghuigung Branch in Jongno-gu, Seoul. Photo by Dongju Yoon doso7@

According to the amendment, to strengthen the soundness of Saemaeul Geumgo, the capital contribution requirements for establishing Saemaeul Geumgo will begin to be raised step-by-step starting from July 2025. Accordingly, from July 2028, the capital contribution standards are expected to be strengthened by 3 to 5 times compared to the current levels.

This amendment was prepared to induce the establishment of sound Geumgo by updating the establishment standards of Saemaeul Geumgo to reflect financial market conditions. However, to minimize market shocks caused by this amendment and to ensure policy predictability, the capital contribution standards will be raised step-by-step within five years after the promulgation.

First, from July 1, 2025, to June 30, 2028, the capital contribution standards for regional Geumgo to be established will be set as follows: 1 billion KRW or more for special cities and metropolitan cities, 600 million KRW or more for special self-governing cities and cities, and 200 million KRW or more for towns and townships.

From July 1, 2028, the capital contribution standards for establishing Saemaeul Geumgo will be raised to 2 billion KRW or more for special cities and metropolitan cities, 1 billion KRW or more for special self-governing cities and cities, and 500 million KRW or more for towns and townships.

The Ministry of the Interior and Safety explained, "The current capital contribution standards were changed in 2011 and are lower than the level necessary for the establishment and continuation of Geumgo, so there has been a need to raise the capital contribution standards to reflect reality. This amendment aims to ensure that Saemaeul Geumgo can be established and operated with at least the minimum capital secured at the initial stage."

The government is strengthening the establishment standards for Saemaeul Geumgo due to recent concerns about insolvency. The combined operating results of all 1,293 Saemaeul Geumgo in the first half of this year recorded a net loss of 123.6 billion KRW. The overall delinquency rate of Saemaeul Geumgo rose by 1.82 percentage points from the end of the previous year to 5.41%. By sector, the corporate loan delinquency rate increased by 2.73 percentage points to 8.34%, and the household loan delinquency rate rose by 0.42 percentage points to 1.57%. Saemaeul Geumgo explained that although the loan delinquency rate increased due to the real estate market downturn, it remains at a manageable level.

Choi Byung-kwan, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, said, "The strengthening of the capital contribution standards is intended to allow competitive Saemaeul Geumgo with sufficient capital to enter the market in the changed financial environment. We will continue to encourage the establishment of Saemaeul Geumgo capable of sound operation and strengthen management and supervision so that after establishment, Saemaeul Geumgo can grow soundly as a community- and low-income-oriented financial institution in line with its original purpose."

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