Korea Credit Guarantee Fund (KODIT) celebrated the 20th anniversary of the Credit Insurance System on Sept. 6 at the ICC Hotel in Daejeon. On hand to celebrate were some 200 officials representing small businesses and Vice Minister Choi Soo-kyu of the Ministry of SMEs.
The event looked back at the achievements of KODIT’s insurance. President Nam Dong-wook of Hanjae Co. recalled the benefit of the insurance policy for his company when it was faced with certain bankruptcy. The Credit Insurance System allows SMEs to insure its receivables in the event of a default. The system is 20 years old this year.
The system was first introduced in September 1997 to stop a chain bankruptcies by SMEs and help them continue to stay in businesses. As of August 2017, accumulated insurance money paid out to the SMEs insurance policyholders totaled 110 trillion won, with sales of insurance products growing in the past 20 years of operation.
The system was essentially an economic safety net during crises, preventing SMEs from going out of business, keeping job losses to a minimum.
From last year and until this August, the system paid some 108.6 billion won in insurance money out to 1,326 SMEs, preventing them from going belly-up and thereby saving 17,697 jobs.
This year, some 4,000 people will find jobs due to KODIT securing a 120 billion won budget, boosting the Credit Insurance sales to 19.5 trillion won.
KODIT officials said Credit Insurance has been a strong support protecting SMEs from all kinds of dangers in business transactions, “and we will develop it further as an integrated service business in an area of sales receivables in the upcoming new era of the 4th Industrial Revolution,” the company said.
KODIT said it set up the Job Creation Promotion Team in support of President Moon’s policy task to create more jobs around the country. Part of the policy aims to turn non-regular jobs into regular jobs, and create new ones.
So far, KODIT set up “Start-up Growth” branches in its eight operational regions around the country in support of the creation of new jobs.
In addition, it has been working on creating new jobs through generational youth job support programs, including the New Youth Hope Dream Guarantee and the New Middle Age Happiness Dream Guarantee. It also aims to introduce the “youth employment special guarantee program” to spur the creation of new jobs for youths, stepping up programs to create new jobs in the private sector. As of July 31, the credit guarantee fund issued credit guarantees worth 44.5 trillion won to 200,000 business firms employing some 1.53 million employees.
KODIT is a public financial institution established in June 1976 under the provisions of the KODIT Act. As stipulated in Article 1 of the Act, the main purpose of the fund is to lead a balanced development of the economy by extending credit guarantees for the liabilities of promising small- and medium-sized enterprises (SMEs) which lack tangible collateral.
KODIT's capital funds are the financial resources prerequisite for KODIT to maintain its public trust, to provide credit guarantee, to make payment under guarantees and to earn revenue from managing surplus capital funds. The main sources of the capital funds are the contributions from the government, financial institutions and enterprises.
