North Korean banks have recently begun selling financial products with guaranteed deposits, Daily NK has learned. While these sales are limited for now, their scope might be expanded in the future.
“Banks here offer a product in which deposits are backed up by the government. That product has been widely sold around the country since mid-2019,” a source in North Korea told Daily NK on Monday.
In general, North Koreans are highly distrustful of public finance, and the government has been working hard to rebuild that trust and normalize banking. As part of that effort, it has apparently been selling financial products that guarantee bank deposits.
“There’s a product that guarantees the principle as well as interest, but there are certain conditions that must be met to sign up,” the source added. This suggests the deposit guarantee is only made available on a limited basis.
The source said that North Korea’s bank deposit guarantee is available to special individuals and organizations, rather than the general public, without specifying the application requirements.
“You can’t just make [guaranteed deposit] accounts for no reason. A monthly fee is deducted from these accounts, so people are cautious about setting them up,” the source explained.
That suggests that management fees are assessed on guaranteed deposit accounts, just as they are on mutual funds and insurance policies. Whereas South Korean bank deposits are legally guaranteed under the Depositor Protection Act, North Korean banks appear to be selling financial products that guarantee deposits.
“At the moment, individuals are limited to one [guaranteed deposit] account for deposits of one year or less, but can make unlimited accounts for deposits of five years or more,” the source said. That appears aimed at encouraging North Koreans to deposit their money in banks for long periods of time.
“Agencies, companies and organizations can set up accounts at the central bank, and individuals can set them up at deposit institutions and regional branches of commercial banks,” the source added.
In related news, the North Korean authorities are requiring individuals in certain occupations — including government employees — to make deposits.
“Employees at state-funded agencies, teachers, doctors, and workers at Workers’ Party, government, and law enforcement institutions are required to have a couple of [savings] accounts. In 2019, the minimum monthly savings required by the state was KPW 1,000. But as of now [September 2022], that amount starts at KPW 5,000 and goes up to KPW 500,000,” the source said.
“[Savings] are mandatory for some people and optional for others. Many ordinary people are skeptical and reluctant to deposit money without a special reason,” the source continued, adding, “They still remember with horror watching sacks of KPK 5,000 bills being burned during the currency reform [of 2009], and they don’t think the monetary authorities have been normalized during the intervening years.”
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