Deposit insurance fee hikes face pushback from financial firms

Financial institutions are protesting proposed hikes to deposit insurance fees, arguing that such a significant increase could impose an undue strain on the sector and ultimately be passed onto consumers, according to statements from industry representatives on Thursday. The Korea Deposit Insurance Corporation (KDIC) is evaluating higher deposit insurance rates across various financial sectors, marking the first such adjustment since 2009.

This proposal follows the government's decision in September to double the deposit protection limit from 50 million won ($36,000) to 100 million won. The KDIC, responsible for collecting fees from financial entities to establish a fund for reimbursing depositors in the event of bank failures, contends that the industry should bear a larger portion of the financial burden, given the increasing number of failed financial entities, including numerous savings banks and MG Non-Life Insurance companies.

However, the magnitude of the proposed increase has become contentious. A recent study commissioned by the KDIC estimates that the deposit insurance rate for banks should be raised to 0.13 percent of eligible deposit balances from its current level.