Kim Younghwan Proposes Mandatory Dormant Deposit Contributions by Financial Institutions to Support Inclusive Finance for Low-Income Citizens

Kim Younghwan, a member of the National Assembly's Planning and Finance Committee from the Democratic Party of Korea, announced on April 22 that he plans to sponsor an amendment to the "Act on Support for Financial Lives of the People." The bill aims to expand the funding resources of the Korea Inclusive Finance Agency and maximize the efficiency of utilizing dormant deposits.

Currently, the Korea Inclusive Finance Agency uses only the "interest income" from dormant deposits, which are voluntarily contributed based on MOUs signed with financial institutions, as its business resources. This is because, under the current law, the original depositors' rights to claim payments are recognized virtually indefinitely, requiring the principal to be preserved at all times to meet possible withdrawal demands.

Young Hwan Kim, member of the Democratic Party of Korea.

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However, there have been criticisms regarding legal fairness, as the statute of limitations-a basic principle under civil and commercial law-does not apply to dormant deposits. In addition, as government fiscal input is limited, there is a growing call to make more active use of dormant deposits to secure funding for stabilizing the livelihoods of low-income households.

This amendment focuses on fundamentally improving the management system of dormant deposits to significantly increase available financial resources for inclusive finance. The main provisions include: ▲ securing stable resources by making contributions of dormant deposits by financial institutions mandatory; ▲ establishing legal stability by imposing a 10-year statute of limitations after contribution. Furthermore, ▲ by requiring the continuous retention of a payment reserve, a safety mechanism is provided to guarantee the original depositor's right to claim refunds even after the statute of limitations expires. This enables the Korea Inclusive Finance Agency to directly use the principal, excluding the payment reserve, for its business, thereby greatly enhancing the scale of available resources and the effectiveness of support.

Assemblyman Kim stated, "Nobel Peace Prize laureate Muhammad Yunus described dormant deposits as 'resources that benefit many without harming anyone,'" and emphasized, "This amendment seeks to establish a flexible legal framework that thoroughly guarantees the original depositor's right to claim refunds while transforming dormant resources into a substantial pillar for inclusive finance."

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