"Only Up to 50 Million Won in Savings Banks"... Deposits Exceeding KODIT Limit Drop Sharply in One Year

Deposits Over 50 Million Won, June Last Year 16.5 Trillion → June This Year 15.8 Trillion
Protected Deposits Increased by 7.7 Trillion in the Same Period
Rising Interest in Principal Guarantee Amid Liquidity Concerns... Also Diversified Deposits

Over the past year, deposits below the depositor protection limit of 50 million KRW have increased in the savings bank sector, while non-protected deposits exceeding 50 million KRW have decreased. This is interpreted as an increase in investors who want to earn higher interest rates compared to banks while ensuring the principal is securely protected.

According to data obtained by Asia Economy from the Korea Deposit Insurance Corporation on the 17th, the 'net excess deposits' exceeding the depositor protection limit of 50 million KRW among savings bank deposits amounted to 15.8 trillion KRW as of June. This is a decrease of 700 billion KRW compared to 16.5 trillion KRW in June last year. This figure saw a significant decline over the past year. It dropped by nearly 1 trillion KRW from 17.4 trillion KRW in March to 16.5 trillion KRW in June, and continued to decline from 16.1 trillion KRW in September to 15.6 trillion KRW in December.

On the other hand, 'protected deposits' insured by the Korea Deposit Insurance Corporation increased. They grew from 100.4 trillion KRW in June last year to 108.1 trillion KRW in June this year, an increase of 7.7 trillion KRW over one year. Although the growth slowed recently as savings banks reduced their deposits, the amount steadily increased to 103.4 trillion KRW in September last year and 110.8 trillion KRW in December.

Under the current Depositor Protection Act, if a financial institution goes bankrupt, the Korea Deposit Insurance Corporation protects deposits up to 50 million KRW per person (including principal and interest). As of the end of March, the proportion of deposits covered by depositor protection in total deposits was 93.8% for savings banks.

The increase in protected deposits and decrease in net excess deposits indicate that more customers are entrusting their money only up to the 50 million KRW limit eligible for depositor protection at savings banks. The savings bank sector offers deposit interest rates 0.8 to 1.0 percentage points higher than banks to prevent deposit outflows, so demand has grown for safely managing lump sums while benefiting from high interest rates.

An industry insider said, “Most customers who subscribed to last year's high-interest special promotions deposited less than 50 million KRW.” He added, “There were already many customers depositing less than 50 million KRW, but this trend seems to have intensified due to increased liquidity concerns.” Another industry source explained, “Some customers who previously deposited more than 50 million KRW also diversified their deposits across multiple savings banks to protect their principal.”

[Image source=Yonhap News]

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