Seoul: The maximum amount of bank deposits protected by the state will be doubled to 100 million won (US$71,919) starting this week, as the financial sector braces for a possible overheating of competition to attract more deposits, industry sources said Sunday. The increase in the ceiling from the current 50 million won to 100 million won is set to take effect Monday, marking the first hike since 2001.

According to Yonhap News Agency, under the revised regulation, passed by the National Assembly late last year, deposits of up to 100 million won will be protected in the event of contingencies, including the bank itself going bankrupt. Separately, it will also cover up to 100 million won in retirement pensions, pension savings, and insurance payouts.

The hike is expected to help ensure the safety of deposits and also boost convenience for those who previously deposited their savings in separate accounts for protection. However, the increase has also raised concerns over the possible mass transfer of deposits to the secondary financial sector, such as savings banks and insurance firms that generally offer a higher interest rate than commercial banks, though no such indications have been monitored yet, according to officials.