KakaoBank has launched an equity-linked bond (ELB) fund whose returns are determined by moves in the KOSPI200 index. The fund evaluates the index every three months and will pay returns for the holding period based on an annual rate of 7.4 percent and redeem early if the index does not fall below its initial level.

KakaoBank said on Monday it launched its first ELB fund, titled "7.4 percent a year if the KOSPI200 does not fall."

The product assesses every three months whether early redemption conditions are met, based on the KOSPI200 level at the start of operations. If the index at the evaluation date is the same as or higher than the initial level, principal and contracted returns are paid and the investment ends.

For example, if the KOSPI200 index is at 800 points at the start of operations, the product redeems early if the index is at 800 points or higher after three months. In that case, it calculates and pays three months of returns based on an annual rate of 7.4 percent.

If the index is below the initial level, the investment continues until the next evaluation date. It then checks the index every three months, and if the early redemption condition is not met, the investment can continue for up to three years.

If held to the three-year maturity and no credit risk occurs at the issuer, it seeks to pay back principal. The fund is not covered by deposit protection, and principal losses may occur if credit risk arises, such as the issuer closing down, or if investors redeem or terminate before maturity.

The subscription period runs until the 30th. Customers can check the product terms and subscribe through the fund menu in the "Investment" tab on the KakaoBank app.

A KakaoBank official said, "We introduced the ELB fund for customers seeking new investment opportunities at a time of high market volatility," adding, "We will expand product options in line with customers' investment preferences and market conditions."