Home Supervision Financial Institutions Prudential Regulation and Supervision Classification of Financial Services Businesses

Classification of Financial Services Businesses

Nonbank Financial Companies

Mutual Savings Banks

The principal business of mutual savings banks is limited to accepting deposits and making business and consumer loans for retail customers and small businesses. Concurrent businesses are closed to mutual savings banks.

Primary businesses for mutual savings banks are largely limited to deposit and loan services, commercial bill services, intermediary services for government and public enterprises, and financial services firms, and debit card and payment settlement services. Mutual savings banks may also engage in broker/dealer services and trust services as provided under the Financial Investment Services and Capital Markets Act (FSCMA) with authorization/approval from the FSC/FSS. Consumer financing services are also open to certain qualified mutual savings banks.

Mutual savings banks may engage in the sale of loans and act as agents for the sale of gift certificates and lottery tickets, and offer bancassurance services with authorization/approval from the FSC/FSS.

Specialized Credit Finance Companies

Specialized credit finance companies (SCFCs) comprise credit card companies, leasing companies, installment finance companies, and new technology venture capital companies. SCFCs mostly specialize in consumer finance services that traditionally have not been effectively delivered by large commercial banks. In addition to primary businesses that require FSC/FSS approval or registration, SCFCs may carry on services secondary to the primary services.

Credit card service is a business open to SCFCs with FSC/FSS approval, while installment finance business, leasing business, and new technology venture capital business require registration with the FSC/FSS. The primary businesses for the four CSFSs are as follows:

  • Credit Card Companies: Credit card issuance and services including payment processing, and managing credit card merchants;
  • Leasing Companies: Leasing specific properties such as facilities, machines, equipment, vehicles, ships, and aircraft for a specific length of time in return for cash payment (rent);
  • Installment Finance Companies: Installment finance companies are a type of consumer finance companies that conclude a sales/purchase agreement for a good or a service with a seller and a buyer, makes payment to the seller for the good or the service purchased by the buyer, and receives regular principal and interest payments from the buyer;
  • New Technology Venture Capital Companies: Technology investment and financing, management of technology companies, new technology guidance and support, and the formation and management of technology cooperatives;

In addition to the authorized/approved or registered primary businesses, SCFCs may engage in secondary businesses including making loans, factoring, purchase of securitized assets, debt guarantee business, custodian business for asset securitization, consumer and borrower credit checks connected with loans and factoring. For credit card companies, secondary businesses include credit services, debit card services, and payment settlement and management services. Certain travel and insurance services are also open to credit card companies as secondary businesses.

Mutual Credit Cooperatives

Mutual credit cooperatives comprise credit unions and agricultural, fishery, and forestry cooperatives. They are member-owned service entities that accept deposits from and make loans to members, offer discounted bill services, and other activities as specified in the applicable laws. There are no service activities that are specified as secondary business for credit unions. There is no concurrent business for credit unions.