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Are Your Deposits Insured?

Deposit Insurance Coverage

Korea provided protection of up to KRW 20 million per depositor (or KRW 50 million won for insurance policyholders) when the deposit insurance scheme was first introduced. However, in the wake of the 1997 Asian financial crisis, blanket guarantees were temporarily introduced in order to minimize the impact of the restructuring of the financial system and ensure the stability of financial transactions. In 2001, limited coverage was reinstated. Since January 1, 2001, the KDIC has insured up to KRW 50 million per depositor including principal and designated interest in case an insured financial institution goes bankrupt due to an insurance contingency (e.g. business suspension, license revocation).

Designated interest

  • The lesser of the agreed interest and the KDIC-determined interest (the interest rate the KDIC determines in consideration of the average interest rate of one-year term deposits of commercial banks)

For the remaining amount that is not KDIC-insured, depositors can recover all or part of that when they receive bankruptcy dividends from the bankruptcy estate. The bankruptcy estate pays bankruptcy dividends from remaining assets, if any, after repaying senior debts.

The coverage limit of KRW 50 million is the total amount that a depositor can receive per institution. It is not calculated per type of deposit or per branch. “Per depositor” means not only individuals, but also corporate entities. If a depositor of a failed financial institution has an outstanding debt to the institution, the debt will be deducted from the deposit (which is called a set-off) and the remaining amount will be protected.