Saemaul Geumgo, the Breakwater during the Financial Crisis

The head office of Saemaul Geumgo (today known as the Korean Federation of Community Credit (KFCC)) in Oryu-dong located in Yeongdeungpo-gu, Seoul.
Despite its looks, this is no ordinary bank in an ordinary neighborhood. A local fixture since 1975, this branch of Saemaul Geumgo has led the development of Oryu-dong for the past four decades. The list of its achievements is as long as its history; for instance, it established a local center for senior citizens and has supported major businesses and welfare projects.

In the late 1990s when Korea was hit by the financial crisis, Oryu-dong Saemaul Geumgo guarded the local residents like a breakwater. Even when all other banks in the nation suspended financial benefits, Oryu-dong Saemaul Geumgo alone engaged actively in credit business and granted emergency loans, earning the villagers’ trust that their maeul geumgo was better than commercial banks.

Kang Jang-Seok, the founder and the first Chairman of Oryu-dong Saemaul Geumgo, explains the fundamental reasons behind earning the trust of the villagers as follows:

Accomplishing the Achievement of Being the “No. 1 Saemaul Geumgo in Korea”

Oryu-dong, a suburban area on the outskirts of Seoul, was incorporated into Seoul from Bucheon, Gyeonggi Province in 1963. It was primarily occupied by small-scale businessmen or laborers. Saemaul leader Kang Jang-Seok, having lived in Oryu-dong for three generations, had a particularly strong passion for his hometown. His desperate wish to “make his poverty-stricken hometown flourish” was what drove him to establish Saemaul Geumgo. Established in November 1975 with a mere three-pyeong (10 m2) office, Saemaul Geumgo’s fund reached the 100 million won mark in April of the following year. Rumors began to spread among villagers.

Faced with such groundless criticism, Kang’s family members persuaded him to stop, saying there is no reason for him to take those accusations when he wasn’t paid a single penny for his work. Nevertheless, he did not confront the villagers. Instead, he and five other accountants took turns staying in the office all night guarding the cash that was deposited after business hours.

As a result of these efforts, the geumgo assets dramatically increased to 1.2 billion won by the end of 1977 and tripled the following year. The number of members went from 94 to 31,700 in three years; their investment from 10 million to 3.25 billion won during the same period, recording an unprecedented achievement. It was an amount far exceeding 1 billion won, which people expected to be the limit of maeul geumgo.

Modern Welfare Facilities Established Independently by Villagers

Those villagers who had invested in Saemaul Geumgo began to see the tangible benefits that resulted from their investments. Villagers running small-scale businesses were freed from high-interest loans by getting loans based on their credit. Small- and medium-sized local companies desperate for investment were able to stabilize their business bases.

Oryu-dong Saemaul Geumgo was originally launched as a credit business for the welfare of the villagers. Accordingly, profits were divided into three every year, depositing 30%, distributing another 30% and investing the rest in village welfare projects. When there was too much profit left over even after distributing it at a surprisingly high percentage of 24% each year, Saemaul Geumgo established a considerably large center for senior citizens in 1978. It wasn’t simply a senior center but the most advanced modern welfare facility at the time, equipped with a library and a conference room.

Saemaul Geumgo did not stop there: it purchased the latest street-cleaning trucks to independently handle village cleaning in line with its policy to prioritize village welfare projects, in addition to purchasing and autonomously operating buses to assist villagers living in areas with no access to transportation.

In 1979, the President awarded a citation to Oryu-dong as a group in recognition of its development and the villagers invested the entire presidential grant in the amount of 70 million won in establishing joint community stores.