The government announced the Financial Sector Master Plan in January. The Plan is the road map for the development of Thailand’s financial sector during the next 5-10 years. The financial sector as envisaged in the Plan would be efficient and stable while ensuring consumer protection. In addition, the sector would non-discriminatingly provide financial services to all customer groups including low-income household and small and medium enterprises (SMEs).

Financial services for all walks of life

The visions of the Plan can be translated into three broad categories of policy measures. The first group of measures aims at broadening public access to financial services. In addition to their current roles, SFIs such as the Government Savings Bank (GSB) or the Bank for Agriculture and Agricultural Cooperatives (BAAC) would be charged with a new responsibility to promote community’s micro-finance institutions. The BOT has also encouraged private banks to serve the low-income on a commercial basis.

Restructuring the sector in pursuit of efficiency

The second category of measures lies in efficiency enhancement area. There will only be two types of licenses for Thai financial institutions: full-service banks and retail banks. Similarly, foreign financial institutions have two license choices: subsidiaries or full branches. Both licenses allow foreign banks to undertake same activities as those of full-service banks. The only difference is that a subsidiary can open up to four offices, one in Bangkok and three outside, while a branch can only have one.

As part of the measures to increase efficiency of the sector, the “One-Presence” policy is introduced. A financial conglomerate can only have one type of license while a foreign bank must opt to be a hybrid bank, subsidiary, or full branch. In addition, basic infrastructure such as credit bureaus, foreclosure and bankruptcy procedures, for the financial sector will be improved. The BOT also plans to streamline cumbersome rules and regulations regarding branch opening and closure, and lending requirements for provincial branches and foreign bank branches.

Deposit insurance scheme to enhance consumer protection

The last category of measures focuses on consumer protection. Banks are required to establish customer complaint handling process and to disclose necessary information related to their services to facilitate consumers’ decisions. The blanket guarantee should be replaced with a deposit insurance scheme at a proper time.