Postal savings

Postal savings (우편예금) refer to non-bank financial services provided as incidental postal services by Korea Post.

Key words
postal savings, post office, deposit, insurance

History
The postal savings business was introduced in the early stages of Korea economic development, to raise funds required for national development projects and to contribute to the convenience of rural residents in areas where private financial services were then unavailable.

It was operated as one component of incidental postal services following enactment of the Postal Savings Act in December 1961, but effectuation of the Law on the Repeal of the Postal Savings Act in March 1977 suspended the acceptance of new deposits and transferred balance management services to the gricultural cooperatives.

The postal savings business eventually resumed in July 1983, in accordance with the Postal Savings and Insurance Act of December 1982. Computer networks were established at post offices nationwide in June 1990, and networks of post offices and banks were connected in 1995, thereby providing improved access to banking services via post offices.

Meanwhile, in order to establish a system of responsible management at postal service offices, Korea Post was established in July 2000 under the Ministry of Information and Communication (currently the Ministry of Knowledge Economy). Korea Post has since managed all aspects of the postal services including the postal savings business.

Business and Services
Postal savings are sub-classified into demand deposits and savings deposits. The Minister of Knowledge Economy determines the specific kinds of deposits, the persons eligible to make such deposits, and the interest rates paid on them. Postal savings are managed by the government, and the government thus assumes responsibility for the payment of principal and interest.

Postal savings also raises funds through the sale of state and public bonds on the condition of their repurchase.

While the operation of funds was for merly limited to deposits in financial institutions or purchases of state and public bonds, it has since expanded to include the trading and lending of securities, lending to financial institutions through financial brokerage firms, and the trading of derivatives, as prescribed by the Financial Investment Services and Capital Markets Act following amendment of the related laws in 2004 and 2009. To maintain stable fund operation some financial transactions have been conducted with ceilings on purchases, as prescribed by ordinance of the Ministry of Knowledge Economy. Since 1994, in addition, residual funds, exclusive of funds required for payment of deposits, have been deposited in the Public Capital Management Fund as prescribed by the Public Capital Management Fund Act.

Aside from postal savings, the financial and banking services maintained by a postal services office include postal insurance, money orders and postal transfers. A money order is a means of remitting funds online or through receipt transfer, and enables the transfer of funds to payees in remote rural areas where banks may not be accessible. Postal transfer is a system enabling the settlement of funds via a postal transfer account opened at a post office, and through which a variety of services can be provided including receipts of taxes, public utility fees and installments; payments of various pensions and salaries; automatic withdrawals of public utility fees; and issuances of checks.