Published on September 8, 2007
Out of concern about the economic situation and the stability of the financial sector, Finance Minister Chalongphob Sussangkarn said he would not push for a quick implementation of the Deposit Insurance Agency.
"We will listen to other people's views, and many are worried that the economic situation has not yet strengthened and some banks are still weak," he said.
The Cabinet on August 28 approved a draft bill on limited deposit insurance. The bill is on the way to consideration by the National Legislative Assembly (NLA). Critics, however, expressed concern that it would negatively affect small banks.
The new institution will guarantee only Bt100
million for each deposit account, reduced to Bt1 million in five years.
Earlier the central bank wanted to implement the measure in a year and a half. Chalongphob, however, said the government would listen to the public and discuss the D-day date with the NLA.
According to the central bank's plan, implementation will start in the middle of 2009 if the bill is approved by the NLA this year.
The guarantee will then be reduced from 100 per cent to Bt50 million per pass book per bank. By the middle of 2013 the deposit guarantee will be reduced to Bt1 million.
The Finance Ministry and the Bank of Thailand will jointly hold a seminar on the bill and another bill related to the financial sector next week, Chalongphob said.
The deposit insurance will replace the Financial Institutions Development Fund (FIDF), which was the central bank's financial rescue arm during the 1997-1998 financial
crisis, resulting in a taxpayer bill of Bt1.4 trillion. The blanket guarantee offered by the FIDF is partly blamed for the huge burden on taxpayers. The deposit insurance bill would shift the financial risk to savers who must take responsibility themselves when they put their savings into a bank.
Chalongphob had earlier said he wanted to pass the Deposit Insurance Law within the term of the interim government. However, his statement yesterday indicates that he realises that it would difficult to pass new economic laws after the government's failure to push for its version of the Foreign Business Act.