On Jul. 29, SK FSC proposed amended mutual financial regulations.
SK FSC issued legislative notice of amendments to the regulation on supervision of mutual financial business, to set detailed standards for management soundness.
Follows Apr. 2021 SK FSC proposed rules re credit union soundness, see #102451.
Amendments
FSC will conduct regulatory review on amendments to enforcement decrees and rules.
Stipulates credit limit regulation and liquidity ratio regulation by industry, based on management soundness standards of the enforcement decree of the credit union act.
Ratio of liquid assets to liabilities should be 100% or higher, 3 months from maturity.
In the case of credit unions with total assets of less than KRW100bn, regulations are relaxed so that they only need to maintain a liquidity ratio of 90% or more.
Effectiveness
Comments should be submitted by Sep. 7, 2021.
In Oct. 2021, FSC revised rules on mutual savings bank loss provisions, see #119722.
In Jan. 2022, SK FSS proposed detailed rules on mutuals supervision, see #126927.
Jan. 12, 2022 Supervisory Regulations Revised
On Jan. 12, 2022, SK FSC issued finalized supervisory regulations on mutual finance business, introducing new lending caps and liquidity rules on mutual finance firms.
Credit extension to real estate and construction sectors will each be limited to 30% of total lending, while total amount of credit extension to both sectors capped at 50%.
Mutual finance businesses will be required to maintain 100% liquidity ratio in principle.
Those with total assets in the range of KRW30bn to KRW99bn in the preceding business year will be required to maintain at least 90% liquidity ratio; those with total assets below KRW30bn in the preceding business year subject to a minimum 80%.
This revision will go into effect from Dec. 29, 2024, with a transition period of 1 year.
Jan. 12, 2022 SK FSS
On Jan. 12, 2022, SK FSS issued release on the same subject as FSC's Jan. 12 release.
