Dormant Account Foundation to Be Launched
By Lee Hyo-sik
Staff Reporter
A 51-year old man, identified only by his surname Kim, has been unable to expand his rice cake shop in northern Seoul as banks and other financial institutions have refused to lend him money, citing his poor credit record and lack of collateral.
The only place he can turn to for funds is loan sharks, which charge up to 100 percent interest per year, well over the legal limit of 66 percent set by the government. Kim has agonized over whether to borrow money from private moneylenders at high interests or scrap the expansion plan.
But help may be on the way for people like Kim as the government is planning to launch a public foundation next month to manage dormant or unclaimed bank savings and insurance benefits to help low-income people set up businesses and receive vocational training. The money will also be used to assist credit delinquents in paying their debts.
Banks and insurers are to contribute dormant financial assets by the end of this month as a special bill on dormant deposit transfer went into effect Monday. The National Assembly passed the bill in July last year.
The government will then establish the public foundation that will use dormant assets to give loans to people in the low-income bracket and carry out a range of projects to help improve the livelihoods of the less privileged.
Low-income households with poor credit ratings have trouble borrowing money from banks or other financial services companies, with many turning to private lenders who charge significantly higher interest rates.
Banks define ``dormant'' accounts as those with less than 10,000 won that are left without deposits or withdrawals for more than one year; those with 10,000-50,000 won in deposits that are left without transactions for more than two years; and those with 50,000-100,000 won left without transactions for more than three years.
Commercial lenders, insurers and securities companies plan to complete the transfer of 340 billion won in unclaimed accounts that have deposits of less than 300,000 won to owners' active accounts by early next month.
As for another 300 billion won in unclaimed accounts that have deposits of more than 300,000 won, financial companies will notify accountholders by the end of this month and refund the money to those who claim it.
Financial firms will then contribute unclaimed deposits by the end of March to the envisioned public foundation. But the Financial Supervisory Service said even after the establishment of the foundation, if depositors claim the money in their dormant accounts, the foundation will give back the money to accountholders.
Customers can confirm whether they have a dormant account on homepages of bank and insurance associations, including www.kfb.or.kr, www.klia.or.kr and www.knia.or.kr.