Korea Deposit Insurance Corporation

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Korea Deposit Insurance Corporation

Yegeum Bohum Gongsa
Agency overview
Formed June 1, 1996
Agency executive Kim Joo-Hyun, Chairman & President (Since 2012)
Parent agency Financial Services Commission
Website http://www.kdic.or.kr/english/index.jsp
Korea Deposit Insurance Corporation
Hangul 예금보험공사
Revised Romanization Yegeum Bohum Gongsa
McCune–Reischauer Yegŭm pohŏm kongsa

The Korea Deposit Insurance Corporation (KDIC) is a deposit insurance corporation, established in 1996 in South Korea to protect depositors and maintain the stability of the financial system. The major functions of KDIC can be classified into five categories such as insurance management, risk surveillance, resolution, recovery, and investigation.

Historical Highlights[edit]

KDIC Building in Seoul, South Korea


  • Dec. 29 The Depositor Protection Act was enacted.


  • Jun. 01 The KDIC was established.


  • Jan. 01 The KDIC began its operations as a deposit insurer.
  • Apr. 30 The first deposit insurance premiums were collected.


  • Jan. 03 The first Deposit Insurance Fund Bond was issued.
  • Apr. 01 Deposit insurance funds were consolidated under the management of the KDIC, creating a single, integrated deposit insurance system.


  • Dec. 27 The Resolution Finance Corporation (RFC) was established.


  • Jan. 01 Limited Coverage System was reinstated.
  • Dec. 24 The Special Investigation Mission began its operations.


  • May. 06 The KDIC Joined the International Association of Deposit Insurers (IADI) as a founding member.
  • May. 23 The Concealed Property Report Center opened.


  • Jan. 01 The New Deposit Insurance Fund was created.
  • Mar. 25 MOU with the Central Deposit Insurance Corporation (CDIC) was signed.
  • Sep. 04 MOU for joint examination of financial institutions with the Financial Supervisory Service (FSS) was signed.
  • Oct. 23 The KDIC hosted the IADI Annual Meeting & Conference.


  • Jan. 01 Credit Unions were excluded from deposit insurance coverage.
  • Nov. 18 The KDIC hosted an International Workshop on "Investigation Methods on Failed Financial Institutions and Employees of Default Companies."


  • Jun. 14 The KDIC hosted the International Open House 2006.
  • Jun. 16 Letter of Intent (LOI) for mutual cooperation with the Deposit Insurance Corporation of Japan (DICJ) was signed.
  • Oct. 31 MOU with the Deposit Insurance of Vietnam (DIV) was signed.
  • Dec. 18 Agreement with the Financial Services Compensation Scheme (FSCS) for mutual cooperation and communication was signed.



  • Nov. 23 Foreign currency denominated deposits were included in the coverage.
Mr. Lee Seung-Woo, the Chairman & President


  • Jan. 01 The Target Fund System came into force.
  • Mar. 24 MOU with the Deposit Insurance Agency (DIA) of Russian Federation was signed.
  • May. 27 Mr. Lee Seung-Woo was appointed as the 7th Chairman & President.
  • Jun. 06 Retirement Pension products were included in the coverage.
  • Nov. 11 The Resolution Finance Corporation (RFC) was closed.


  • May. 28 MOU with the Deposit Insurance of Vietnam (DIV) was renewed.
  • Nov. 19 MOU with the Indonesia Deposit Insurance Corporation (IDIC) was signed.


Financial Safety Net in Korea[edit]

The financial safety net in Korea consists of the KDIC, the financial supervisory authorities (Financial Services Commission & Financial Supervisory Service), the Ministry of Strategy and Finance, and the Bank of Korea. To ensure effective cooperation among the financial safety net players, several measures have been put in place.

  • There are MOUs signed by the KDIC, financial supervisory authorities, and the Bank of Korea agreeing on joint examinations and sharing of financial information. The MOUs are crucial to achieving balanced financial supervision and exchange of financial information.
  • When necessary, the KDIC can request insured institutions and the Financial Supervisory Service to provide data.
  • The KDIC can also either request the Financial Supervisory Service to examine a particular financial institution and inform the KDIC of the result, or request the Financial Supervisory Service for a joint examination.
  • Also, high-ranking officials from each of the organizations participate in the others' top decision making committee.

Overcoming the Financial Crises[edit]

During the 1997 East Asian financial crisis, the KDIC's adoption of blanket coverage restored the public's confidence in the financial system. The integration of deposit insurers which had previously been scattered in different sectors into one organization (Apr. 1998) enabled further enhancement of public confidence. By preventing bank-runs and boosting financial competitiveness, the KDIC helped to improve foreign investors' confidence in the Korean economy and achieve an early turnaround. The KDIC's decisive response was crucial to overcoming the crisis. Also in the course of the financial restructuring which was undertaken in the wake of the crisis, the KDIC successfully resolved over 500 financial institutions and gained unique expertise in resolution. With reinforced public confidence in deposit insurance, the KDIC went into the recent global financial crisis more prepared. There was no sign of bank-runs. Only five mutual savings banks went bankrupt during 2008-2009. The KDIC decided to expand its coverage to include foreign-currency deposits and other products for additional protection. Also, the KDIC established a Contingency Plan in order to better cope with future crises.

The Basis for the KDIC's Mandates and Powers[edit]

The Depositor Protection Act[edit]

The KDIC's mandates and powers come from the Deposit Protection Act (DPA) which was enacted in Dec. 1995. The purpose of this Act is to contribute to the protection of depositors and maintenance of the stability of the financial system by efficiently operating a deposit insurance system, etc. in order to prevent a situation in which a failed institution is unable to reimburse its depositors. The DPA has an Enforcement Decree as a supporting legislation. The Decree is designed to provide for matters delegated by the DPA and those necessary for its enforcement.

The Special Act on the Management of Public Funds[edit]

To ensure efficient use of public funds as well as to minimize the financial burden on citizens, the Special Act on the Management of Public Funds was enacted in Dec. 2000. The Act lays out how to enhance the objectivity, fairness and transparency of fund raising and management.

Other Acts[edit]

Other laws that provide the basis for the KDIC's mandates and powers include the Act on the Structural Improvement of the Financial Industry, and the Act on the Fund for Repayment of Public Funds.

The Execution of Mandates and Powers[edit]

The Deposit Insurance Committee[edit]

The Deposit Insurance Committee is the highest decision-making body of the KDIC. As such, it deliberates and renders decisions on key matters. It is composed of seven individuals including the President of the KDIC (Chairman), the Vice Chairman of the Financial Services Commission, the Vice Minister of the Ministry of Strategy and Finance and the Senior Deputy Governor of the Bank of Korea. The three remaining committee members are appointees commissioned directly by the Financial Services Commission and the other two are recommended by the Minister of the Ministry of Strategy and Finance and the Governor of the Bank of Korea.

The Board of Directors[edit]

The Board of Directors, as the highest executive body of the KDIC, is composed of one President, one Executive Vice President, four internal Executive Directors, and seven non-Executive Directors. The auditor may express opinions at Board meetings, but cannot participate in the Board's voting process.

Organizational Structure[edit]

As of the end of Sep. 2010, the KDIC is composed of ten departments, five offices and one bureau. The total number of employees stands at 563. This number included general employees, and special employees such as attorneys, doctoral researchers, conservators, bankruptcy estate trustees, examiners, etc.

The Major Functions of KDIC[edit]

Policy and Fund Management[edit]

The KDIC implements deposit insurance policies and manages funds. The funds in the KDIC are divided into the Deposit Insurance Fund Bond Redemption Fund and the (New) Deposit Insurance Fund (DIF). The Redemption Fund was established to complete the financial restructuring and recover public funds injected during the first and second rounds of financial assistance following the 1997 East Asian financial crisis. The new DIF could start with a clean state from then. The annual premium revenue of the DIF in 2009 was KRW 1.24 trillion.

Ongoing Risk Surveillance[edit]

The KDIC identifies troubled financial institutions through on and off-site monitoring and requests financial institutions or supervisory authorities to take appropriate actions to prevent failure.

Support of Insolvent Financial Institutions[edit]

The KDIC supports an insolvent financial institution in accordance with the following four principles: Least Cost Principle, Loss-Sharing Principle, Self-Help Effort Principle and Transparency/Objectivity Principle. And the KDIC usually uses on of two methods: deposit payoff and financial assistance. Financial assistance includes loan extension and fund deposit, purchase of assets and assumption of liabilities, equity investment and contributions.

Resolution of Failed Financial Institutions[edit]

The KDIC resolves a failed financial institution in the least costly manner. Employing a variety of measures from deposit payoff, to purchase & assumption, to the establishment of a bridge bank and to an open bank assistance, the KDIC tries to make the resolution process as orderly and timely as possible. The total number of insured institutions stood at 320, and the amount of insured deposits totaled KRW 2,037,830 billion. (Figures as of June 2009) The coverage limit is KRW 50 million, which is almost USD 45,000, including the principal and interest.

Recovery of Public Funds[edit]

For efficient recovery of public funds injected in insolvent financial institutions, the KDIC can have its staff act as a manager or a trustee of such institutions. Also, the KDIC has the authority to file a liability suit or a damage claim on behalf of insolvent financial institutions.


The KDIC pursues liability claims against former/incumbent employees of insolvent financial institutions for their role in the failure. It also conducts investigations of owners, employees, etc. of default debtor corporations who failed to pay back the money they owed and thus are partially responsible for the insolvency. In addition, the KDIC conducts thorough investigations of concealed properties of insolvency-implicated parties to secure the assets for damage claims against them.

Protection of Deposits[edit]

Types of Insured Institutions[edit]

The KDIC insures banks, financial investment companies, life and non-life insurance companies, merchant banks and mutual savings banks. As of the end of 2009, 321 financial institutions' products were under the protection of the KDIC.

Insurance Coverage[edit]

The KDIC insures bank deposits, customer's deposits for securities trading, individual insurance policies, etc. On the other hand, the KDIC does not insure CDs, RPs, securities, CPs, etc. Also, the deposit insurance excludes deposits by government and insured financial institutions, etc. from its insured products.

Coverage Limit[edit]

The KDIC covers up to 50 million won ($42,823) per depositor. It is 2.5 times of Korea's per capita GDP ($17,074) (Statistics are as of the end of 2009.)

Insurance Premium[edit]

The premium rates are determined on the basis of the average annual balance of deposits in each sector. The rates are 0.08% for banks, 0.15% for financial investment companies, insurance companies and merchant banks and 0.35% for mutual savings banks.

International Cooperation[edit]

Contributions to the IADI[edit]

The KDIC continuously strives to position itself as a global player and strengthen its capacity by enhanceing cooperation with international organizations including International Association of Deposit Insurers (IADI), of which the KDIC is a founding member. The KDIC hosted the 2003 IADI Annual Meeting & Conference. As an Executive Councilmember since the founding of the Association, the KDIC vice-chaired the Research & Guidance Committee (2005-2008) of the IADI. It has also participated in the formation of the global financial regulation as a member of the International Working Group to establish "The Core Principles for Effective Deposit Insurance Systems Methodology." Also, as a chair of the Subcommittee on Handing of a Systemic Crisis, it is leading the research on global financial crises.


The KDIC currently has MOUs on Information Sharing and Mutual Cooperation with nine deposit insurers worldwide.

Global KDIC[edit]

In an effort to share Korea's experience in economic development, the Ministry of Strategy and Finance launched the Knowledge Sharing Program (KSP) in 2004. This technical assistance program draws from Korea's policy-making experience and provides government officials of other countries with research findings, recommendations and training on specific topics relevant to the target country. The KDIC also launched the Global KDIC Program in conjunction with the KSP in 2010. As a first step, the KDIC has participated in the KSP's program to help a foreign government to implement a deposit system, and hosted training programs on how to implement or improve the deposit insurance system.

External links[edit]


  1. ^ Elzio Barreto (9 October 2012). "S.Korea's KDIC raises $550 mln in upsized KEPCO sale-source". Reuters.