TITLE: South Korea's Financial Services Commission Amends Mutual Finance Supervision Regulations
BODY:
On June 17, 2026, the Financial Services Commission (FSC) approved amendments to the Mutual Finance Business Supervision Regulations (상호금융업감독규정). The amendments implement measures from the Mutual Finance System Improvement Plan announced on December 22, 2025, by the Mutual Finance Policy Consultative Council. The regulations took effect on June 17, 2026.
The amendments introduce four key changes to strengthen the mutual finance sector, which comprises credit unions (신협), agricultural cooperatives (농협), fisheries cooperatives (수협), and forestry cooperatives (산림조합). First, the FSC improved the calculation methodology for estimated recovery amounts of non-performing loans, particularly long-term overdue real estate project financing (PF) loans. The amendments restrict the use of final collateral appraisal values and require risk-proportionate loan loss provisions. Second, the FSC established a real estate PF loan limit of 20 percent of total loans for mutual finance institutions, aligning with savings bank requirements, and capped combined real estate, construction, and PF lending at 50 percent of total loans to prevent sector concentration. This limit takes effect April 1, 2027, providing implementation time. Third, the FSC raised the minimum net capital ratio requirement for mutual finance institutions to 4 percent of total assets, with phased implementation through 2031 to support loss absorption capacity. Fourth, the FSC increased the management guidance ratio for mutual finance central associations to 7 percent, matching savings bank levels, with differentiated timelines through 2034 to ensure stable capital accumulation.
The FSC and Financial Supervisory Service (금융감독원) committed to implementing these measures to enhance soundness and credibility in the mutual finance sector while supporting its identity as a regional and community-focused financial institution.