Yoo Dong-su Proposes Amendment to Saemaeul Geumgo Act for Direct Supervision by Financial Authorities

Yoo Dong-su, a member of the Democratic Party of Korea, has proposed the "Partial Amendment to the Saemaeul Geumgo Act" to subject Saemaeul Geumgo's credit and mutual aid businesses to direct supervision and orders from the Financial Services Commission and inspections by the Financial Supervisory Service.

Under the current law, other mutual finance institutions such as Nonghyup, Suhyup, and Shinhyup receive direct soundness supervision and inspections from financial authorities. However, Saemaeul Geumgo is supervised financially by the Ministry of the Interior and Safety, its competent ministry, and the Minister of the Interior and Safety supervises its credit and mutual aid businesses in consultation with the Financial Services Commission, thus only receiving indirect supervision from financial authorities.

According to Representative Yoo, the absence of direct management and supervision by financial authorities creates blind spots in soundness management, increasing uncertainty in the overall financial market and causing inefficiencies in risk management and system operation within the mutual finance sector.

In particular, last year, Saemaeul Geumgo's real estate project financing (PF) related loan amount reached 56 trillion won, with a delinquency rate of about 10%, a high level. The bank run incident caused by 60 billion won in non-performing loans at Namyangju Dongbu Saemaeul Geumgo raised concerns about the risk of insolvency at Saemaeul Geumgo.

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Rep. Yoo pointed out, "Saemaeul Geumgo has grown into a mutual finance institution with assets and business scale comparable to the top five commercial banks, beloved by the public. However, last July’s bank run incident revealed a range of issues including soundness problems, non-performing loans, and allegations of corruption involving the central association president and executives, leading to calls for direct management and control by financial authorities."

He added, "Therefore, we have worked to include provisions for Saemaeul Geumgo to be directly supervised by financial authorities to ensure soundness and enhance fairness with other mutual finance institutions. Through this amendment, I hope Saemaeul Geumgo can regain public trust and be reborn as a mutual finance institution that supports ordinary citizens and revitalizes the local economy in accordance with its original founding purpose."

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