No progress on deposit agency
No progress has been made in establishing the Deposit Insurance Agency, despite the relevant legislation being passed, says an official of the Bank of Thailand. The Deposit Protection Act was endorsed by the National Legislative Assembly and took effect on Aug 11. But the appointment of its management executives and chairman, in accordance with the law, is pending cabinet consideration, said Sorasit Soontornkes, an assistant central bank governor.
The agency will remove the Financial Institutions Development Fund's full guarantee on deposits, which has been in place since 1998.
The Deposit Insurance Agency is due to start phasing out this full guarantee one year after the new law took effect. Deposit insurance will progressively decrease to 100 million, 50 million, 10 million and one million baht per account in the second, third, fourth and fifth year.
Regulators expected the agency's operation to improve risk management in depositors and the banking system.
The agency will also act as liquidator in case any financial institution closes down.
Yet, despite the banking system responding to the passing of the Deposit Protection Act by launching campaigns to expand their deposit bases, Mr Sorasit said there has been no progress in implementing the new law.
''The deposit insurance agency has not started operating. The appointment of directors and management has been constantly postponed from the cabinet's meeting agendas,'' he said.
In a separate development, Singhachai Boonyayotin, the director of the central bank's Financial Market and Reserve Management Department, said the second-phase financial master plan would aim at improving the banking system's liquidity risk management through derivatives instruments.
Other measures include promoting mortgage insurance and allowing financial institutions to use securities other than government bonds as borrowing collateral to improve liquidity.
The Central Bank also plans to develop payment systems that facilitate cross-currency real-time settlement, he said.