Credit Co-operatives Pay Max. 5 Million Won Per Person

From 4th, 6.8 million persons who have invested or deposited in 115 insolvent credit co-operatives stopped the operation can`t withdraw fund from them for 1- 3 months. However, if early, 5 million won at maximum can be withdrew per person from the end of this month.

On the 4th, Finance Supervisory Service (FSS) announced the list of insolvent credit co-operatives, commented that the persons or members deposited money to them can withdraw the principal of 50 million won at maximum from Korea Deposit Insurance Corporation (KDIC).

Kim Dae-pyung, Senior Officer for Non-Banking Sector of FSS spoke “The deposit over 50 million won can not be guaranteed by regulation, but only a few hundred persons deposited more than 50 million won.” And added “The 115 co-operatives as insolvency designated by Credit Assessment Committee are stopped to withdraw.”

KDIC will pay 5 million at maximum per person who needs money as provisional payment. For the persons who need money more, KDIC will arrange loan at low interest rate with the mortgage of deposit stopped to withdraw from other financial institutes. KDIC will send administration teams to the co-operatives to manage until 3rd of May 2003 for 6 months.

The total amount of deposits and investment in the co-operatives is estimated about 2.42 trillion won. However FSS estimates that actual public find for deposit payment will be 1.13 trillion won considering 53% debt collection rate of co-operative in the past.

According to geographical statistics, there are 20 co-operatives stopped the operation in Kyungbuk, 18 in Daegu, 11 in Kyungnam, 9 in Kangwon and Chungnam respectively, 8 in Kwangju, 6 in Seoul Ulsan and Chungbuk respectively, 5 in Daejun, 4 in Chunbuk, 2 in Kuynggi and 1 in Cheju.

If they don`t improve the management fundamentally within 6 months, they should close.

FSS announced “It is the last time to stop the operation of many co-operatives in a bundle, in the future, it will be decided individually.”

At the moment, 191 credit co-operatives if total 1242 co-operatives whole in the country are under loss their capital totally. So there will be year around work out of oc-operatives until the end of next year.

Dong-Won Kim Cheol-Yong Lee daviskim@donga.com lcy@donga.com