South Korea’s interior ministry announced on Monday that amendments to the Saemaul Credit Cooperatives Act (Saemaul Geumgo) will be promulgated on Tuesday. The move marks a major step in addressing governance flaws and financial vulnerabilities exposed by the mutual credit cooperative’s July 2023 bank run. Key revisions include limiting the central chairman’s authority to external representation and board leadership, introducing a single four-year term and expanding cooperatives’ access to liquidity from the Bank of Korea and other financial institutions. Reserve deposit ratios for cooperatives will also rise from 50% to 80% to enhance financial stability.

The reforms further require large cooperatives to appoint full-time auditors and codify “timely corrective actions” for struggling branches. New provisions empower members with litigation rights and the ability to dismiss executives, aligning with broader efforts to improve oversight, transparency and depositor protection within South Korea’s mutual credit institutions.