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Management of Deposit Insurance Funds

  • The KDIC’s funds have separate accounts for banks, investment brokers and dealers, life insurance companies, non-life insurance companies, merchant banks, mutual savings banks and credit unions (only in the case of the Deposit Insurance Fund Bond Redemption Fund). These accounts are managed separately.
  • Though between-account transactions within the same fund are allowed, transactions between the Deposit Insurance Fund and the Deposit Insurance Fund Bond Redemption Fund are prohibited.
  • Under the Public Fund Redemption Plan announced by the government in 2002, it was decided that assets and liabilities related to financial restructuring would be separated from the Deposit Insurance Fund (DIF) on January 1, 2003 to set up a new fund called the DIF Bond Redemption Fund. The DIF Bond Redemption Fund is used for completing the financial restructuring process and recovering related public funds. It was also decided that the DIF would be funded with insurance premiums paid after 2003 to deal with insurance contingencies that occur after 2003.

On April 1, 2011, the KDIC created the special account for mutual savings banks within the DIF which will remain in place until the problems in the mutual savings banking sector are successfully dealt with. The special account is a temporary measure (effective until December 31, 2026) aimed at restoring the financial health of the mutual savings bank account of the DIF. The account is managed separately from the other accounts in the DIF.

The special account for mutual savings banks is funded from the following resources.

  • Contributions from the government
  • Funds raised by issuing Deposit Insurance Fund bonds
  • Borrowings from the other DIF accounts
  • Borrowings from the government, Bank of Korea, insured financial institutions and other agencies designated by the Presidential Decree
  • 45/100 of yearly insurance premiums paid by each insured financial institution (However, the rate for mutual
    savings banks can be adjusted within the limit of 100% as determined by the Deposit Insurance Committee in consideration of the size of assistance provided to the mutual savings bank account from the special account.)
  • Late payment charges for deposit insurance premiums that should go to the special account
  • Funds raised by collecting claims
  • Funds recovered from financial assistance provided for the resolution of failed financial institutions
  • Investment profits of the Deposit Insurance Fund and other revenues