Home > KDIC's Major Activities > Management of Deposit Insurance Funds
The Deposit Insurance Fund is funded from the following sources.
When an insured financial institution receives a business license or an approval for establishment, it should pay the KDIC an amount calculated by multiplying its paid-in capital or equity investments by a pre-determined rate within the limit of 1/100 (10/100 for merchant banks and mutual savings banks) within one month after the date of business opening. However, in case of a merger or spin-off, there is no need to pay such contributions.
Any person who has obtained authorization for investment brokerage and trading services for collective investment securities only under Article 9.21 of the Financial Investment Services and Capital Markets Act should pay a contribution in the amount obtained by multiplying the minimum equity capital provided for in Attached Table 1 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act by 1/100. However, in case the person who has obtained authorization for investment brokerage and trading services for collective investment securities only has also obtained authorization for the investment brokerage and trading services for other securities under Article 12 of the Financial Investment Services and Capital Markets Act, and if the amount of contribution paid when he/she obtained authorization for investment brokerage and trading services for collective investment securities only falls short of the amount determined under Article 14.1.2 of the Depositor Protection Act, he/she should pay the difference.
Insured Financial Institutions | Contribution Rates |
---|---|
Banks | 1/100 |
Investment Traders and Brokers | 1/100 |
Insurance Companies | 1/100 |
Merchant Banks | 5/100 |
Mutual Savings Banks | 5/100 |
Each insured financial institution should pay the KDIC as annual insurance premiums the amount calculated by multiplying the balance of deposits, etc. (in the case of insurance companies, the amount of money determined by the Presidential Decree in consideration of the liability reserves under Article 120 of the Insurance Business Act) by the rate prescribed in the Presidential Decree not exceeding 5/1,000. (If the amount is less than KRW 100,000, they should pay KRW 100,000 instead.)
Insured Financial Institutions | Premium Rates |
---|---|
Banks | 8/10,000 |
Investment Traders and Brokers | 15/10,0001) |
Insurance Companies | 15/10,0002) |
Merchant Banks | 15/10,000 |
Mutual Savings Banks | 40/10,000 |
1) For insured deposits that are held by securities firms (including trusts) in accordance with Article 47.1 of the Financial Investment Services and Capital Markets Act, a 30% discount is offered.
2) Premium rates can be adjusted within the limit of 5/100 considering the insurance company¡¯s number of years in business, credit profile and financial health.
Target Reserves1) | Banks | Investment Traders and Brokers | Life-insurers | Non-life Insurers | Merchant Banks | Mutual Savings Banks |
---|---|---|---|---|---|---|
Lower Limit | 0.825% | 0.825% | 0.660% | 0.825% | Deferred2) | 1.650% |
Upper Limit | 1.100% | 1.100% | 0.935% | 1.100% | 1.925% |
1) Target reserves are a certain percentage of insurable deposits as of the end of the KDIC¡¯s previous financial year.
2) It was impossible to set the target because there was only one insured merchant bank.
3) The reserve targets as above are applied from April 2011.
The Deposit Insurance Fund is preferentially invested in bonds, such as government/public bonds within the scope where stability, profitability, and liquidity are guaranteed. The purchased bonds, in principle, are held until maturity. To maintain the stability of the funds, investment in performance-based products, with no principal guarantee, is prohibited, while investment in MMF beneficiary certificates of investment pools for public funds is allowed.
There are pre-determined percentages for investment in each of the above categories - bonds, MMF beneficiary certificates of investment pools for public funds and deposits. However, the percentages can be adjusted to a certain degree so that the funds are managed flexibly to cope with unexpected market conditions.