Korea’s National Growth Fund faces criticism over bank sales channel selection

The Financial Services Commission’s retail-focused National Growth Fund is drawing criticism over how its sales channels were chosen. Although the policy fund is designed to combine public money with household investment to foster advanced strategic industries, some banks were left out as distributors, raising questions about fairness.

At the same time, because policy funds typically depend on fast fundraising and efficient sales early on, asset managers may have prioritized channels with stronger distribution capacity.

According to the financial industry on Wednesday, iM Bank, Jeonbuk Bank, Suhyup Bank and Jeju Bank were not included among banks set to sell the fund starting in May.

The five major commercial banks — KB Kookmin, Shinhan, Hana, Woori and NH NongHyup — secured sales rights, along with Busan Bank, Kyongnam Bank and Gwangju Bank.

The retail National Growth Fund will total 600 billion won, with 120 billion won in government fiscal funds structured to absorb losses first. The goal is to share investment gains from advanced strategic industries with the public. Three managers — Mirae Asset Global Investments, Samsung Asset Management and KB Asset Management — were selected and will determine sales channels.

Critics say excluding some regional and specialty banks could create blind spots in policy finance. While iM Bank has converted into a commercial bank, it still has more branches outside major cities. The fund is being promoted as part of balanced national development, but residents in rural and mountainous areas could be left out of policy benefits. Others note that expanding non-face-to-face sales may limit the impact on access.

Some in the industry also say managers screened sales channels using criteria tied to their own performance — such as the share of their funds sold and overall fund sales volume — rather than the capabilities of the banks themselves. “They allocated channels while looking at the sales-share rankings,” an asset management industry official said.

Still, analysts say it is common for policy funds to favor financial firms with broad sales networks and strong investor reach to build early momentum and raise money quickly. Another official said the three managers coordinated “so their sales outlets would not overlap,” adding that they could add more selling banks later.

Some banks excluded from the sales list have expressed disappointment. The fund is seen as likely to sell well because it offers tax benefits, including an income deduction of up to 18 million won and a dividend income tax rate of about 9.9%. With the added symbolism of participating in a government-backed initiative, many financial firms are said to have wanted to join.

Meanwhile, even banks selected as sellers are uneasy that the sales schedule is moving ahead before the product structure and tax requirements are finalized. Concerns have also been raised about transparency in the selection process and the need for prior consultation. Kim Dae-jong, a professor at Sejong University, said the fund must emphasize stability and verification given the risk of mis-selling, and called for clear guidelines on selection standards and internal control requirements.