Ruling Party Proposes Bill to Increase 'KDB Capital by 15 Trillion'... Accelerating Execution of '100 Trillion AI Fund' Pledge

Discussions to increase the legal capital limit of Korea Development Bank (KDB) have resumed within the ruling Democratic Party of Korea. Concerns have been consistently raised both inside and outside the industry that KDB's 30 trillion won capital limit has been over 90% exhausted, hindering its function as a policy financial institution. Since the inauguration of the Lee Jae-myung government, voices within the ruling party have been calling for a resolution to this issue. Particularly, as KDB is expected to handle the execution of the '100 trillion AI fund', a key pledge of President Lee, there is growing interest in whether this will accelerate the expansion of KDB's capital.

According to political circles on the 17th, Democratic Party lawmaker Park Sang-hyuk (pictured) proposed an amendment to the Korea Development Bank Act on the 16th. The main point is to increase the legal capital limit, currently set at 30 trillion won, by 15 trillion won to 45 trillion won. Representative Park, who proposed the bill, also serves as the chief spokesperson and deputy floor leader of the Democratic Party.

The legal capital of KDB has been continuously expanded from 1 trillion won in 1981, 5 trillion won in 1995, 10 trillion won in 1998, 20 trillion won in 2009, to 30 trillion won in 2014, but there has been no change in the capital level for about 10 years since 2014. Accordingly, both the Democratic Party and the People Power Party have voiced the need to increase the legal capital, but discussions have recently stalled.

However, after the inauguration of the Lee Jae-myung government, the ruling party has for the first time proposed a bill to expand the legal capital. Representative Park told Financial News, "The need for expanding the legal capital of KDB has been a continuous issue."

Representative Park explained, "As of the end of June this year, KDB's paid-in capital is 27 trillion 40 billion won, with a capital exhaustion rate of 90.12%, which is virtually close to the legal limit, leaving little room for capital expansion." He pointed out that there is a growing need for large-scale financial support for the development of core technologies related to advanced strategic industries such as AI and semiconductors, the nurturing of related companies, and infrastructure construction.

Political and financial circles see this move as a measure to accelerate the creation of the 100 trillion AI fund, a key pledge of President Lee. The government is pursuing a plan to create a 50 trillion won advanced strategic industry fund led by KDB to strengthen the competitiveness of future new businesses such as AI, semiconductors, robots, and secondary batteries. The main resources will be raised through the issuance of government-guaranteed advanced strategic industry fund bonds, but some costs are planned to be covered by KDB's own resources, necessitating an adjustment of the legal capital limit.

Currently, KDB has established a task force (TF) to create a 50 trillion won advanced strategic industry fund and plans to expand it into a vice president-level organization in the future. Accordingly, it is reported that the position of vice president within KDB will increase by one.

Representative Park stated, "By increasing KDB's legal capital to 45 trillion won, we aim to promptly respond to policy financial demands, thereby promoting the development and nurturing of industries, the expansion of social infrastructure, regional development, financial market stability, and the supply and management of funds necessary for sustainable growth, ultimately fostering the sound development of the financial industry and the national economy."


cjk@fnnews.com Choi Jong-geun Reporter