The Banking System of Thailand


The Banking System of Thailand

In Thailand, banking system is regulated by the Financial Institution Act B.E. 2551 (2008), which defines a commercial bank and sets out the type of businesses a bank may undertake. The law covers commercial banks for small businesses, and banks which are subsidiaries or branches of a foreign commercial bank.

The Thai financial sector is regulated by the Ministry of Finance (MOF) and the Bank of Thailand (BOT).

The MOF sets out fiscal policy, economic and financial system policy, economic policy; oversees public finances, taxation, treasury, government property, as well as oversees operations of state enterprises and government monopolies.

Roles and Responsibilities of the Bank of Thailand:

1.Print and issue banknotes and other security documents.

2.Promote monetary stability and formulate monetary policies.

3.Manage the BOT’s assets.

4.Provide banking facilities to the government and act as the registrar for the government bonds.

5.Provide banking facilities for the financial institutions.

6.Establish or Support the establishment of payment system.

7.Supervise and examine the financial institutions.

8.Manage the country’s foreign exchange rate under the foreign exchange system and manage assets in the currency reserve according to the Currency Act.

9.Control the foreign exchange according to the exchange control act.

Perspectives

According to the Main Plan, there will be only two kinds of financial institutions in Thailand that can operate in the field of banking business. These are the banks with a full range of services and banks that serve small business (at the moment, all banks operating in Thailand are banks with a full range of services).

Banks with a full range of services: offers a full range of financial services for all types of customers, with the exception of insurance underwriting, brokerage, trading and underwriting securities.

Banks that serve small business (Retail Banks): The provision of financial services to small and medium enterprises and low-income customers, taking into account the credit limit per customer. In fact, retail banks can provide all of the same financial services as banks with a full range of services, but they do not have the right to conduct business related to foreign currencies and derivative financial instruments.

Regarding to foreign financial institutions, there will be only 2 types of foreign financial institutions:

Fully-fledged representative office: can provide all the same services as banks with a full range of services, except that there would not be allowed to open more than one representative office or perform banking operations in Thailand in any other form than that which this representative office engaged.

Subsidiaries: can provide all the same services as banks with a full range of services, and they are allowed to open 3 - 5 branches. Criteria for the establishment of subsidiaries will be introduced later.

Subsequent implementation phase will be directed primarily to restructuring of foreign financial institutions in Thailand.

Investment