Suggested citations
AGLC4 | 상업은행법 2015 [Commercial Banks Law of the Democratic People's Republic of Korea (2015)] [tr Daye Gang].
Bluebook | Sangeobeunhaengbeob 2015 [Commercial Banks Law of the Democratic People's Republic of Korea (2015)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on January 25, Juche 95 (2006), as Directive No. 1529 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on July 22, Juche 104 (2015), as Directive No. 576 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF COMMERCIAL BANKS LAW
Article 1 (Objectives of Commercial Banks Law)
Commercial banks are institutions specializing in work such as deposits, borrowing, and settlements. The Commercial Banks Law of the Democratic People’s Republic of Korea shall serve to strictly adopt systems and order in the establishment, work, accounting, combination, and dissolution of commercial banks to raise the role of commercial banks and assure convenience in financial trading.
Article 2 (Principle of establishing commercial banks)
Correctly establishing commercial banks is a basic requirement for correctly implementing the finance policy of the State. The State shall assure fairness, objectivity, and benefits from the establishment of a commercial bank.
Article 3 (Principle of work in a commercial bank)
Rationally organizing the work of commercial banks is an important guarantee to assure the safety of financial trading and protect traders’ interests. The State shall maintain credibility in commercial banking work and must modernize and scientize it.
Article 4 (Principle of operating commercial banks)
The State shall operate commercial banks so that they have relative independence in business activities as a profits system.
Article 5 (Principle of training commercial bank workers)
The State shall strongly manage commercial bank worker lineup and must raise their responsibility and role. Only people who have the relevant qualifications may become workers of commercial banks
Article 6 (Principle of guidance over commercial bank work)
Standardized guidance for commercial banks in the Democratic People’s Republic of Korea shall be done by the Central Bank under the guidance of the Cabinet. The State must correctly adopt a guidance system for commercial banks and must strengthen control over them.
Article 7 (Subject of application of law)
This law shall be applied to commercial banks established and operating inside areas of the Republic. The establishment and operation of commercial banks in special economic zones and the establishment and operation of investment banks of a foreign country shall follow the given regulations.
Article 8 (Exchange and cooperation)
The State shall strengthen exchange and cooperation with other countries and international organizations in the commercial bank work field.
CHAPTER II. ESTABLISHMENT OF COMMERCIAL BANKS
Article 9 (Establishment approval for commercial banks)
Establishment approval for commercial banks shall be done by the Central Bank. Institutions, enterprises and organizations may not do bank work without approval and may not use the text of “bank” as the name of their institution.
Article 10 (Submission of application document to establish a commercial bank)
Institutions, enterprises and organizations seeking to establish a commercial bank must submit an establishment application document to the Central Bank. On the establishment application document must be stated content such as the name of the bank, the principal sum, the subject of trade, the scope of the work, and the location.
Article 11 (Deliberation on application document to establish a commercial bank)
The Central Bank must deliberate on an application document to establish a commercial bank within 60 days of receiving it and must approve or reject it. For approved subjects, an approval document to establish a commercial bank must be issued.
Article 12 (Preparation to operate a commercial bank)
Institutions, enterprises and organizations that have received approval to establish a commercial bank must finish preparing to normally operate the bank within the determined period. The Central Bank must determine the operating preparations period of the commercial bank by taking into consideration the scale of the principal sum and the scope of the work.
Article 13 (Establishment registration of commercial banks and issue of operating permits)
Commercial banks that have finished preparing their operations must register their institution at the province (or municipality directly under central authority) People’s Committee of the location of the bank within 30 days. The Central Bank must issue an operating permit within 10 days of the commercial bank’s registration.
Article 14 (Organs of commercial banks)
Commercial banks may have required divisions such as a management division, work divisions, information analysis divisions, financial supervision divisions, training divisions, and internal bookkeeping divisions. They may organize and operate a Board of Directors as necessary.
Article 15 (Installation of branches and missions)
Commercial banks may create organs such as branches and missions in different areas inside and outside the country. In these cases, the approval of the authorities concerned shall be received.
Article 16 (Amended registration for commercial banks)
In cases where commercial banks seek to change the bank name, principal sum, trade subject, scope of the work, or location, it must draft an amended registration application document and submit it to the Central Bank. The Central Bank must deliberate upon the amended registration application document within 30 days and must notify the commercial bank of the result.
Article 17 (Reissue of operating permit)
In cases where a commercial bank has damaged or lost its operating permit, it must have it reissued in time.
CHAPTER III. WORK OF COMMERCIAL BANKS
Article 18 (commercial banking worktype)
The work of commercial banks is as follows.
1. Deposits
2. Lending
3. Opening and managing accounts
4. Domestic settlements
5. Takeover, discounts, and exchange price manipulation of foreign settlements, promissory notes, and securities
6. Foreign currency exchange
7. Credit verification and warranties for trader
8. Issuing, buying, and selling financial bonds
9. Precious minerals trading activities
10. Registration of fixed assets
11. Buying and selling designated currency
12. Bank cards
13. Other approved work
Article 19 (Deposits)
Commercial banks may accept deposits from traders to actively mobilize idle funds. In these cases, commercial banks must diversely open up labour activities to increase their deposits.
Article 20 (Payment of deposits and confidentiality)
In cases where a trader requires payment for their deposit, a commercial bank, it must correctly pay the principal and interest in time. It must thoroughly assure confidentiality for deposits.
Article 21 (Possession of reserve funds for payment)
Commercial banks must possess determined reserve funds for payment to properly pay the deposit. Reserve funds for payment may not be put to a different use.
Article 22 (Reserve funds)
Commercial banks must accumulate determined reserve funds in the Central Bank. Reserve funds accumulated in the Central Bank may only be retrieved and used in cases where a commercial bank is combined or dissolved.
Article 23 (Borrowing conditions)
A commercial bank may lend funds required for improving business activities according to the request of a trader. In these cases, commercial banks must use the loan funds in conformity with the content of its contracts.
Article 24 (Source of lending)
Sources of lending shall be things such as deposits received from traders, own funds, and loan funds received from the Central Bank. Commercial banks may not give loans by exceeding the source of lending.
Article 25 (Lending contract)
For traders with the ability to repay, commercial banks shall conclude lending contracts in writing and give the loan. On the lending contract document must be stated things like the loan amount, borrowing use, guarantee, repayment institution and method, and interest rate.
Article 26 (Guarantee, warranty of loan)
Before giving the loan, a commercial bank must receive a guarantee or warranty for the loan from the borrower. A guarantee shall be movable assets or real estate arranged using the funds of the borrower, and a warranty shall be done in writing by a given higher level institution or by a third party with the ability to pay.
Article 27 (Repayment of loan)
According to the contract, commercial banks must correctly accept the principal lending sum and the interest within the determined period. In cases where the repayment period for the principal lending sum and interest are sought to be prolonged or exempted, the approval of the given commercial bank must be received.
Article 28 (Deposit and loan interest rate)
Commercial banks shall determine and apply a deposit interest rate and loan interest rate within the determined standard interest rate and scope of fluctuation.
Article 29 (Organization of settlements)
Commercial banks must organize settlements so that traders can conveniently conduct trade in the designated currency through their accounts. Settlements must be done only in cases where an account contains funds in the currency, as a foundation.
Article 30 (Opening an account)
Commercial banks may open an account to traders for cash circulation and exchange transactions. A trader must only open an account in one bank. Commercial banks may have an account in a bank of a foreign country with the approval of the Central Bank. Funds of an institution, enterprise, or organization may not be deposited into the account of an individual.
Article 31 (Settlement of funds)
Commercial banks must make payments according to the payment directions of the traders. Payments shall use escrow as a foundation.
Article 32 (Takeover, discount, exchange price manipulation of foreign settlements, promissory notes, securities)
The takeover, discount, and exchange price manipulation of foreign settlements, promissory notes, and securities according to economic transactions with other countries shall be conducted by the given commercial bank that has received approval. The takeover, discount, and exchange price manipulation of foreign settlements, promissory notes, and securities shall follow the determined process and method.
Article 33 (Exchange of foreign currency)
Given commercial banks may do foreign currency exchange. Foreign currency exchange must be done in conformity with standard exchange rates, the scope of fluctuation, and the reality of the bank itself.
Article 34 (Credit verification and warranty for traders)
Commercial banks may confirm or provide a warranty to third parties about the state of business administration and credibility of a trader, according to the request of the trader. In these cases, the trader must submit materials on the state of its business administration to the commercial bank. Credit verification and warranties shall be done by the method of publishing things such as a letter of credit or a letter of warranty.
Article 35 (Publication, buying and selling financial bonds)
Commercial banks may recruit funds by issuing financial bonds and may buy or sell bonds of each kind that are in circulation. The issue of financial bonds must receive the approval of the authorities concerned.
Article 36 (Trade in precious minerals)
Trade in precious minerals shall be done by the given commercial banks. Given commercial banks must abide strictly by the order of purchase, storage, and sales of precious minerals.
Article 37 (Registration of fixed assets)
Given commercial banks must correctly register the fixed assets of institutions, enterprises and organizations without exception. The registration of fixed assets must be done by sector, by the type of goods, and by the sum of money.
Article 38 (Buying and selling designated currency)
Commercial banks may buy and sell designated currency with the Central Bank. Buying and selling designated currency shall be done by the method of exchanging North Korean won and foreign currency according to the exchange rate.
Article 39 (Financial work fee)
Commercial banks may receive a financial work fee for work done for traders. The work of deciding a financial work fee shall be done by the central price guidance institution.
Article 40 (Legal representation for State financial affairs)
Legal representation for State financial affairs shall be done by the given commercial banks. Given commercial banks must speedily expend funds according to the State budget funds expenditure document of the Central Bank, and must accumulate State budget funds submitted by traders in the Central Bank in time.
Article 41 (Submission of statistical materials)
Commercial banks shall correctly draft statistical materials related to currency distribution and must submit them to the Central Bank within the determined period. The statistical materials must reflect content on trade such as the state of distribution of the designated currency, deposits, and lending relationships.
CHAPTER IV. ACCOUNTING OF COMMERCIAL BANKS
Article 42 (Establishment of accounting systems)
Commercial banks must record, calculate, and analyse all trades without exception, and must strictly adopt an accounting system that does settlements. Accounting must be based on original documents or the accounting reporting documents of lower units.
Article 43 (Cycle of accounting settlements)
Commercial banks must do accounting settlements according to cycle. Cycles of accounting settlements shall be by quarter, half-year, and year.
Article 44 (Drafting accounting settlement documents)
Commercial banks must correctly draft accounting settlement documents. Accounting settlement documents must state in detail the content of trades, such as income and expenditure in the given period, profits, losses and their handling, and credit-debt relationships.
Article 45 (Inspection and submission of accounting settlement document)
The accounting settlement documents of commercial banks must receive the inspection of the accounting inspection institution. Inspected accounting settlement documents must be submitted to the authorities concerned.
Article 46 (Storage and handling of accounting documents)
Commercial banks must store accounting documents for the determined period. Accounting documents may not be shown to other institutions, enterprises, organizations and citizens without approval.
Article 47 (Financial year, base currency)
The financial year of commercial banks shall be from 1 January to 31 December. Accounting shall be done in North Korean won.
CHAPTER V. COMBINATION AND DISSOLUTION OF COMMERCIAL BANKS
Article 48 (Reasons for combining or dissolving)
In cases where a commercial bank has gravely violated the interests of a trader in the business administration process, or it cannot continue its business activities, it may be combined with another commercial bank or be dissolved.
Article 49 (Submission of application document to combine or dissolve)
Commercial banks seeking to combine with another commercial bank or be dissolved must submit an application document to combine or dissolve to the Central Bank. The drafting of an application document to combine or dissolve must follow a determined style.
Article 50 (Deliberation on application document to combine or dissolve)
Once a Central Bank has received an application document to combine or dissolve, it must deliberate upon it within 30 days. The operating permit of a commercial bank for which combination or dissolution has been approved shall be immediately recovered.
Article 51 (Settlement of work at commercial banks being combined or dissolved)
Commercial banks being combined or dissolved must settle their banking work according to a determined process. Central Banks must correctly guide the settlement of the work of a commercial bank that is being combined or dissolved.
Article 52 (Credits and debts for a commercial bank being combined)
The credit-debt relationships of a commercial bank being combined shall be handed over to the newly combined commercial bank as they are. A combined commercial bank must correctly handle the credits and debts it has received.
CHAPTER VI. SANCTIONS AND DISPUTE RESOLUTION
Article 53 (Penalties)
Penalties shall be imposed in cases as follows.
1. In cases where an account has been opened, a deposit accepted, or a loan given out unreasonably
2. In cases where a deposit or loan interest rate has been applied in excess of the determined standard interest rate and the scope of fluctuation
3. In cases where a payment document has not been handled in time without a lawful reason
4. In cases where foreign currency exchange has not been conducted according to the determined process and method
5. In cases where a financial work fee has not been received as determined
6. In cases where the funds of an institution, enterprise or organization has been deposited in the name of an individual
7. In cases where banking work was suspended or working hours were shortened without approval
Article 54 (Suspension of work)
Cases where work shall be suspended are as follows.
1. In cases where banking work has been done without approval
2. In cases where a deposit has not been paid according to the request of a trader
3. In cases where reserve funds have not been deposited in the Central Bank
4. In cases where work inspections have been interfered with
Article 55 (Cancellation of establishment approval of commercial bank)
In cases where work has not been started within 30 days of the day the operating permit was received, the establishment approval of the commercial bank shall be cancelled.
Article 56 (Administrative or criminal responsibility)
Responsible workers of institutions, enterprises and organizations and individual citizens that have caused grave consequences to commercial bank work in violation of this law shall have administrative or criminal responsibility imposed depending on the gravity.
Article 57 (Dispute resolution)
Disputes related to commercial bank work shall be resolved by method of agreement. In cases where they cannot be resolved by method of agreement, they may be resolved by filing court proceedings in the Republic or by an arbitral organ.
Last updated 16 December 2020