From September, the deposit protection limit will be 100 million won... How much can I be protected?

The deposit protection limit will increase from 50 million won to 100 million won starting in September. This means that when banks, as well as financial institutions like savings banks, agricultural cooperatives, and Saemaul Geumgo, go bankrupt, the amount of money protected for customers will be extended up to 100 million won.

On the 15th, the Financial Services Commission announced that it will begin a legislative notice process from the 16th to the 25th of the following month to amend six enforcement ordinances, including the Deposit Protection Act. Afterward, the revised system will be implemented starting September 1st of this year, following approval by the Financial Services Commission, review by the Legislative and Judiciary Committee, and approval by the Deputy Prime Minister's Meeting and the Cabinet Meeting.

It has been 24 years since the deposit limit was raised. As the deposit protection safety net expands, significant changes are expected in individual investors' asset strategies. There is a possibility of a 'money move' phenomenon, where funds shift to places with relatively higher interest rates. The changing details are explained in a Q&A format.

Products protected up to 100 million won.

▶ Commercial banks, savings banks, and mutual financial institutions such as Nonghyup, Suhyup, Shinhan, Forest Cooperatives, and Saemaul Geumgo, including fixed deposits and savings accounts. The protection limit for securities firm deposit funds and insurance company insurance contracts is also raised from 50 million won to 100 million won. However, the protected entities differ. Currently, the Deposit Insurance Corporation protects deposits, foreign currency deposits, securities firm deposit funds, and insurance contracts in accordance with the Deposit Protection Act. Mutual financial institutions such as Saemaul Geumgo, Nonghyup, and Suhyup protect deposits up to 50 million won using their own funds based on laws such as the Saemaul Geumgo Act and the Nonghyup Restructuring Act. The government's recent revision of six enforcement decrees, including the Deposit Protection Act, Saemaul Geumgo Act, and Nonghyup Act, to raise the limit is for this reason.

Are postal savings also protected?

The post office is not covered by the Deposit Protection Act. Since it is a government-operated institution, post office deposits and insurance are protected up to the full amount of the deposit. Instead, the interest rates are generally lower compared to deposits sold by financial institutions.

Is interest also protected?

▶The protected amount up to 100 million won is the principal and interest (principal and interest). If you have a deposit at Bank A and the total amount including principal and interest is 110 million won, you cannot be protected for the 10 million won exceeding 100 million won. To prepare for emergencies, it is better to deposit an amount based on the expected contractual interest plus the principal rather than fully depositing 100 million won. Recently popular foreign currency deposits determine the converted amount in Korean won based on the exchange rate on the day of the incident.

Products excluded from the target.

▶Mutual funds, money market funds (MMF), repurchase agreement bonds (RP), negotiable certificates of deposit (CD), fixed pension-type retirement savings, and subordinated bonds are not initially protected. Therefore, they are not included in the 100 million won increase target. When subscribing to financial products, it is necessary to carefully check whether they fall under the exclusion conditions for depositor protection. Deposits deposited at overseas branches of domestic financial institutions are also not protected.

I currently hold three savings bank deposits. To what extent are they protected?

Protection standards have been established for each financial company and individual investor. For example, if a person opens three deposits totaling 120 million won at B Savings Bank, with amounts of 30 million won, 40 million won, and 50 million won respectively, B Savings Bank will be protected up to 100 million won in case of bankruptcy starting from September. The remaining 20 million won is not protected. If the financial company or industry changes, protection up to 100 million won is provided separately. For instance, if a person has deposits totaling 120 million won at C Savings Bank and also deposits 100 million won at D Commercial Bank, they will be protected up to 100 million won for deposits at each bank.