Thailand - Banking

Thailand has 14 domestically incorporated banks, two foreign bank subsidiaries, 12 foreign bank branches and one retail bank. Domestic banks dominate the market with a market share of 88%. Increasing participation from special financial institutions, non-banks and saving cooperatives promotes financial access for unbanked areas.

The Bank of Thailand -

The Bank of Thailand (BOT), the central bank of the country which headquarter is in Bangkok, was set up in accordance to regulations imposed by the Bank of Thailand Act in 1942. The main functions of BOT are regarded as managing banking facilities, supervising foreign exchange control, as well as monitoring the region-wide economic situations. It also has representative offices in London and New York.

The Roles and Responsibilities of BOT are as follows:

Print and issue the Thai banknotes

Manage the central bank's assets

Provide loans to the local government and financial institutions and act as registrar for government bonds

Supervise and regulate financial institutions

Manage foreign exchange rate and foreign reserve assets in accordance to the Currency Act

Control foreign exchange with the Exchange Control Act

Promote monetary stability and formulate monetary policies

Commercial Bank

Thai commercial banks are made up of branches and representative offices of foreign banks. They function according to the Thai laws and regulations set up by the Ministry of Finance (MOF) and the Bank of Thailand (BOI.). Thai commercial banks provide services of time savings and demand deposits, loan making by discounted bills, overdrafts and hire purchases. Services like syndication of loans, custodian services, merger and acquisition, project feasibility studies etc help them generate fee incomes. They also engage in the issuance of negotiable certificates of deposit and underwriting services of debt instruments.

Foreign Banks:

To open a branch in Thailand, a foreign bank has to comply with rules and regulations set up by the Thai government. For instance, money should to be brought from its overseas head office. Thailand government allows foreign banks to acquire shareholding of 100% for a maximum of 10 years. If they hold over 49% of shares sold, they are not allowed to acquire additional shares.

Special Purpose Bank

Special-purpose banks are state-owned companies to finance activities of particular economic sectors. Their activities are supervised and administered by the Thailand government. They lend out loans at preferential interest rates to specific clients for particular projects. Examples of special purpose banks are the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives, and the Government Housing- Bank.

Government Savings Bank

The Government Savings Bank was first set up in 1913 when King Rama VI set up the Savings Office. The Savings office was later transformed into the Post & Telegraph Department. Its assets and liabilities were eventually taken over in 1947 by the newly formed Government Savings Bank.

The Government Savings Bank has widespread network of offices in the country. It is mainly engaged in collecting savings of small amounts by demand, savings, and time deposits and premium savings bonds. In Bangkok, for instance, it has been running door-to-door floating services 6 days per week for over 30 years. Customers inform the floating bank to stop at their living places by putting a small flag outside homes to indicate needs for deposit or withdrawal transactions.

Savings from small depositors are main source of funding for financing infrastructure projects of governments. Until recently, it invested money in government bonds and securities as well as promissory notes. It also increases use of funds in loan lending to enterprises and individuals of private sectors.

The following are the most well-known and largest banks in terms of assets.

1.    Bangkok Bank

Bangkok Bank is the largest bank in Thailand in terms of assets, with a total of US $78 billion. The bank consists of 1,238 branches locally, 9,211 ATM machines, and has 26 international branches in 13 nations, making them the top Thai bank with the largest overseas branch network.Founded on October 8, 1999, the bank is a publicly listed company and among the top 5 companies in terms of size in the Stock Exchange of Thailand.

2.    Kasikorn Bank

Formerly known as the Thai Farmers Bank, its total assets amount to US$ 70.8 billion. Established on June 8, 1945, the bank offers consumer banking, commercial banking, and corporate banking services among others.