The Deposit Insurance Committee and the Financial Services Commission have the authority to declare a financial institution insolvent or insolvency-threatened when its financial status is so unsound that it is unlikely to return to normal operation.

For efficient recovery of public funds injected into an insolvent financial institution, the KDIC can appoint one of its staff-members to perform the duties of a conservator or a receiver. Also, the KDIC is allowed to file liability or damage claim suits in subrogation of the insolvent financial institution.

In terms of the recovery of injected public funds, the KDIC utilizes a variety of methods, including but not limited to, sales of non-performing loans (NPLs), sales of equity through privatization and issuance of exchangeable bonds, block share sales, securitization through issuance of asset-backed securities, mergers and acquisition (M&As), etc. Furthermore, the KDIC has the authority to participate in receivership activities such as sales of assets or settlements of claims.