1. Reasons for Amendment

In preparation for future external shocks such as interest rate hikes, falling real estate prices, etc., the need for soundness management of savings banks with a high proportion of vulnerable borrowers is increasing. Therefore, there is a need to amend the Regulations for Supervision of Mutual Savings Banks to preemptively strengthen the soundness management of mutual savings banks. 

2. Major Provisions

A. Increase bad debt reserves for multiple debtors (Article 38 (1) 1-3)

Increase bad debt reserves for multiple debtors so that in the event that a multiple debtor uses six financial institutions from the previous five, an additional 30% of the bad debt reserve ratio shall be accumulated, and the multiple debtor uses more than seven financial institutions, an additional 50% of the bad debt reserve ratio shall be accumulated.

B. Calculate credit limit for real estate-related industries based on actual borrowers (Article 22-3 (1) 2) 

Strengthen risk management related to real estate loans by clarifying the classification of industries based on actual borrowers who are obligated to repay principal and interest, not nominal borrowers. 

C. Exclude branches that do not engage in business activities from credit offerings within the business area (Article 22-2 (1) 1 (a))

Branches where actual business activities are not carried out in the business area shall be excluded from credit offerings in the business area, so that savings banks can be faithful to their original function of revitalizing the local finance.