Home | Databases | WorldLII | Search | Feedback Laws of the Republic of Korea

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT

1

ENFORCEMENT RULE OF THE CREDIT GUARANTEE FUND ACT

Ordinance of the Ministry of Finance No. 1089, Mar. 4, 1975 Amended by Ordinance of the Ministry of Finance No. 1186, May 24, 1976 Ordinance of the Ministry of Finance No. 1230, Feb. 14, 1977 Ordinance of the Ministry of Finance No. 1329, Mar. 23, 1978 Ordinance of the Ministry of Finance No. 1410, Dec. 31, 1979 Ordinance of the Ministry of Finance No. 1589, Nov. 30, 1983 Ordinance of the Ministry of Finance No. 1719, Jul. 16, 1987 Ordinance of the Ministry of Finance No. 1730, Dec. 17, 1987 Ordinance of the Ministry of Finance No. 1787, Apr. 1, 1989 Ordinance of the Ministry of Finance No. 1800, Dec. 8, 1989 Ordinance of the Ministry of Finance No. 1855, Mar. 30, 1991 Ordinance of the Ministry of Finance No. 1880, Apr. 24, 1992 Ordinance of the Ministry of Finance No. 1891, Aug. 25, 1992 Ordinance of the Ministry of Finance No. 1897, Dec. 17, 1992 Ordinance of the Ministry of Finance No. 1921, Apr. 27, 1993 Ordinance of the Ministry of Finance No. 2001, Aug. 25, 1994 Ordinance of the Prime Minister No. 662, Dec. 27, 1997 Ordinance of the Ministry of Finance and Economy No. 66, Mar. 12, 1999 Ordinance of the Ministry of Finance and Economy No. 179, Jan. 20, 2001 Ordinance of the Ministry of Finance and Economy No. 459, Aug. 26, 2005 Ordinance of the Ministry of Finance and Economy No. 480, Jan. 24, 2006 Ordinance of the Ministry of Finance and Economy No. 490, Feb. 22, 2006 Ordinance of the Ministry of Finance and Economy No. 561, Jun. 4, 2007 Ordinance of the Prime Minister No. 875, Mar. 3, 2008 Article 1 (Purpose)

(1) The extent of loans of financial institutions under Article 6 (3) of the Credit Guarantee Fund Act (hereinafter "Act") shall be the loans (loan being the standard for contribution) obtained by excluding loans under subparagraph 2 from the loans in subparagraph 1:

1. Loans falling under any of the following items from among the account titles of a balance sheet:

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 2

(a) Loan claims within bank accounts;

(b) Those falling under any of the following from among the trust accounts: () Loans;

() Privately placed debentures (limited to those purchased directly from enterprises);

() Purchased bills (limited to commercial papers purchased directly from enterprises); or

() Credit card accounts (limited to accounts of the amount of an enterprise purchase card and enterprise sales card); (c) Those falling under any of the following from among the merchant banking accounts:

() Discounted bills;

() Discounted trade bills;

() Factoring bills;

() Payment in subrogation of payment guarantee; or () Assets managed by cash management account;

2. Loans falling under any of the following items: (a) Loan funds falling under any of the following bank accounts entitled loans:

() Loans falling under any of the following from among won-denominated loans:

a) Equipment loans from among enterprise loans; or b) Household loans;

() Loans falling under any of the following from among foreign currency-denominated loans:

a) Equipment loans; or

b) Loans borrowed by a branch, agent, business office or office in a foreign country, which has been set up by a financial institution in that foreign country; or

c) Loans lent to an importing company for the settlement of import funds, which are carried out by remitting them directly to the business partner by a financial institution which is engaging in business with the importing enterprise;

() Domestic import usance bills;

() Offshore loans foreign currency-denominated;

() Call loans;

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 3

() Bills purchased: (excluding commercial papers purchased directly from enterprises);

() Foreign currencies purchased;

() Credit card accounts (excluding accounts of the amount of enterprise purchase card and enterprise sales card); () Debit card accounts (excluding accounts of enterprise purchase card and enterprise sales card);

() Bonds purchased under resale agreements;

() Factoring receivables (excluding those under which the financial institution is contracted to exercise rights of recourse to the transferer of account receivables)

() Loans convertible to equity securities; or

(xiii) Gold loans;

(b) Loans falling under any of the following from among the loan title of trust account:

() Equipment loans from among enterprise loans; or () Household loans;

(c) Loans falling under any of the following from among the discounted bill title of merchant banking account and the title of assets run by cash management account:

() Those sold within five business days from the date of purchase from among discounted bills; or

() Those falling under any of the following from among the assets managed by cash management account:

a) Discounted bills of cash management accounts sold within five business days from the date of purchase;

b) Securities of cash management accounts;

c) Deposits in cash management accounts; or

d) Other operational assets of cash management accounts; (d) National fund loans and public fund loans based on the financial resources of money or funds borrowed from the State, local governments and public organizations;

(e) Loans from foreign loans;

(f) Loans between financial institutions;

(g) Loans for which a credit guarantee is executed by a financial institution on commission of a duty under Article 23 (1) 2 of the ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 4

Act from the Korea Credit Guarantee Fund as prescribed in Article 32 of the Act;

(h) Loans (excluding loans that are extended without limiting the use of loans to a specific export deal, of which the term of redemption is less than one year) of the Export-Import Bank of Korea under Article 18 of the Export-Import Bank of Korea Act; (i) Loans as the basis for contributions to the fund under Article 3 of the Enforcement Rule of the Korea Housing Finance Corporation Act and loans being as the basis for contribution to the account under Article 5 of the Enforcement Rules of the same Act; (j) Loans to the Non-performing Assets Fund established under Article 38 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of the Korea Asset Management Corporation;

(k) Loans to the Deposit Insurance Fund established under Article 24 (1) of the Depositor Protection Act;

(l) Loans to the Export Insurance Fund established under Article 30 of the Export Insurance Act;

(m) Loans for special equipment funds to promote investment by enterprises;

(n) Loans Won currency-denominated based on the financial resources of foreign currency from among the loans to assist investment in plant and equipment by enterprises, which are designated by the Financial Services Commission;

(o) Loans designated by the Financial Services Commission from among loans to assist the structural improvement projects of small and medium enterprises;

(p) Loans based on the financial resources of loans from the Korea Development Bank from among loans to corporations relocating to a location out of the Seoul Metropolitan Area under Article 63-2 (1) of the Restriction of Special Taxation Act;

(q) Loans to persons who have subscribed to the property making savings under Article 45 (1) of Act No. 3930, the Act on the Assistance to Residential Stability and raising Lump-Sum Savings of Workers; (r) Loans for which interest is reduced or exempted or the collection of interest is postponed from among the loans to enterprises liable ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 5

for rationalization under Article 12 (2) of Addenda of Act No. 5584, the Regulation of Tax Reduction and Exemption Act; or (s) Loans extended to the Korea Asset Management Corporation based on the financial resources of loans from the Bank of Korea in order to assist the restoration of credit of the person who has defaulted on the financial obligation due to financial difficulties. (2) The decision on loans under the subparagraphs of paragraph (1) shall be based on the balance sheet and the titles of account therein submitted by the financial institutions under Article 47 of the Banking Act, Articles 47 and 49 of the Korea Development Bank Act, Article 3 of the Industrial Bank of Korea Act, Articles 39 and 41 of the Export-Import Bank of Korea Act, and other Acts and subordinate statutes to the Financial Supervisory Service under the Act on the Establishment, etc. of Financial Services Commission. [Wholly Amended by Ordinance of the Ministry of Finance and Economy No. 561, Jun. 4, 2007]

Article 2 (Method of Making Contributions)

Financial institutions shall contribute to the Korea Credit Guarantee Fund an amount obtained by applying the contribution ratio in the annexed Table to the average monthly balance of the loans being the standard for contribution as of the end of each month.

Article 3 (Timing for Contributions)

(1) Financial institutions shall make monthly contributions under Article 2 to the Korea Credit Guarantee Fund by the end of the following month. (2) When financial institutions make contributions under paragraph (1), they shall submit the documents in the following subparagraphs to the Korea Credit Guarantee Fund:

1. Statement of contributions;

2. Papers evidencing average monthly balance;

3. Statement of loans falling under any of the items of Article 1 (1) 2; ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 6

and

4. Other documents designated and announced by the Financial Services Commission.

(3) Notwithstanding paragraph (1), in cases where the Korea Credit Guarantee Fund requests concerning the amount liable for contribution, time to pay, method of ex post facto calculation with the approval of the Financial Services Commission, financial institutions may pay beforehand the contributions scheduled to pay in the future.

ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the enforcement date of these Rules belong. ADDENDUM These Rules shall enter into force on the date of their promulgation. ADDENDA Article 1 (Enforcement Date)

These Rules shall enter into force on January 1, 1988. Articles 2 through 4 Omitted.

ADDENDA Article 1 (Enforcement Date)

These Rules shall enter into force on April 1, 1989. Articles 2 through 4 Omitted.

ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 7

(2) (Applicability) The amended provisions of Article 1 (1) 11 shall be applicable only to the loans extended after December 1, 1989, which are resolved by the Industrial Policy Deliberation Committee on November 28, 1989 concerning the terms, methods, etc. of making loans. ADDENDUM These Rules shall enter into force on the date of their promulgation. ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 2 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date these Rules enter into force belong. ADDENDUM These Rules shall enter into force on the date of their promulgation. ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of its promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) 13 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date when the Minister of Finance designates a loan belongs.

ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) 14 shall enter into force beginning with the portions for which the responsibility of contribution occurs in the month to which the date when the Minister of Finance designates a loan for assistance to the structural improvement projet for small and medium enterprises belongs.

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 8

ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 2 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date of promulgation of these Rules belong. ADDENDA (1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) 10 and 15 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date of promulgation of these Rules belong.

ADDENDA

(1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) 16 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date of promulgation of these Rules belong. ADDENDA

(1) (Enforcement Date) These Rules shall enter into force on February 1,

2001. (2) (Applicability) The amended provisions of Article 1 (1) 17 and 18 shall enter into force, beginning with the portion for which the responsibility of contribution occurs in the month to which the date of promulgation of these Rules belong.

ADDENDA

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 9

(1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability Concerning Contribution) The amended provisions of Article 2 shall enter into force beginning with the portion for which the responsibility for contributions occurs in the month to which the date of promulgation of these Rules belong.

ADDENDA

(1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of the annexed Table shall enter into force beginning with the portion for which the responsibility for contributions occurs in the month to which the date of promulgation of these Rules belong.

ADDENDA

(1) (Enforcement Date) These Rules shall enter into force on the date of their promulgation.

(2) (Applicability) The amended provisions of Article 1 (1) 19 shall enter into force beginning with the portion for which the responsibility of contribution occurs in the month to which the date of promulgation of these Rules belong. ADDENDA

(1) (Enforcement Date) These Rules shall enter into force on July 1, 2007. (2) (Transitional Measures concerning Loan to Corporation Moving to Out-of-Seoul Metropolitan Living Area) The loans under the former provisions Article 1 (1) 17 shall be excluded from the loans being the basis for contributions, notwithstanding the amended provisions of Article 1 (1) 2 (p).

ADDENDA Article 1 (Enforcement Date)

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 10

These Rules shall enter into force on the date of their promulgation. Articles 2 through 5 Omitted.

ENFORCEMENT RULES OF THE CREDIT GUARANTEE FUND ACT 11

Classification Ratio

Standard ratio 22.5/10,000 per annum

Graded

ratio

Total payment in

subrogation in the

immediately

preceding half

year / Total

contribution in

the immediately

preceding half

year

less than 1 - 2/10,000 per annum

1 or above but less

than 2

- 1/10,000 per annum

2 or above but less

than 3

0

3 or above but less

than 4

+ 1/10,000 per annum

4 or above + 2/10,000 per annum

standard ratio + graded

ratio

[Table]

Contribution ratio (relating to Article 2)

Remark

1. When total contribution is calculated, the prepaid contributions under Article 3 (3) shall be deemed to have been contributed at the time of payment under Article 3 (1).

2. When total payment in subrogation is calculated, the payment in subrogation made to a special purpose company established under the Asset-Backed Securitization Act shall be excluded.