Kim Younghwan Proposes Mandatory Dormant Deposit Contributions by Financial Institutions to Support Inclusive Finance for Low-Income Citizens

Proposed Amendment to the Inclusive Finance Act

Mandatory Contribution and Statute of Limitations for Dormant Deposits

On April 22, Young Hwan Kim, a member of the National Assembly's Strategy and Finance Committee from the Democratic Party of Korea, announced his plans to sponsor a partial amendment to the "Act on Support for the Financial Life of Ordinary Citizens." The amendment aims to expand the funding resources for the Korea Inclusive Finance Agency and maximize the efficiency of using dormant deposits.

Currently, the Korea Inclusive Finance Agency uses only the "interest income" generated from dormant deposits donated voluntarily by financial institutions, based on memorandums of understanding signed with these institutions. This is because, under the current law, the right of the original owner to claim payment is recognized indefinitely, requiring the principal to be preserved to meet any potential return requests at any time.

Young Hwan Kim, member of the Democratic Party of Korea.

However, there have been criticisms that not applying the statute of limitations—a fundamental principle in civil and commercial law—to dormant deposits is legally inconsistent. Moreover, amid limited government funding, there is a growing call to utilize dormant deposits more actively to secure resources for the stabilization of the ordinary economy.

This amendment bill is focused on fundamentally improving the management system of dormant deposits to dramatically increase the available financial resources for inclusive finance. Key measures include: ▲ securing a stable resource base by mandating financial institutions to contribute dormant deposits; ▲ establishing legal stability by applying a 10-year statute of limitations after contribution. Additionally, it stipulates the continuous retention of reserve funds, thereby providing a safety mechanism that guarantees the original owner's right to claim a return even after the statute of limitations has expired. This allows the Korea Inclusive Finance Agency to directly use the principal, excluding the reserve funds, for its projects, significantly expanding the scale and effectiveness of support.

Kim stated, "Muhammad Yunus, Nobel Peace Prize laureate, described dormant deposits as 'a resource that benefits many without harming anyone.'" He emphasized, "This amendment bill seeks to establish a flexible legal system that thoroughly guarantees the original owners' right to claim a return while transforming dormant resources into a practical financial pillar for inclusive finance."

This content was produced with the assistance of AI translation services.