News Column

FPO urges tough action against SFI embezzlers

August 12, 2014

By Wichit Chantanusornsiri, Bangkok Post, Thailand

Aug. 12--The Fiscal Policy Office (FPO) has proposed to the Finance Ministry that the Bank of Thailand be given a mandate to file complaints against officials of specialised financial institutions (SFIs) who are suspected of embezzlement.

The move would enhance efficiency in regulating SFIs, said FPO director-general Kritsada Jinavijarana.

The Finance Ministry has authorised the Bank of Thailand to supervise the operations of SFIs and report results to the ministry.

The central bank could also force SFIs to comply with cabinet resolutions or restrain them from doing anything that breached the resolutions.

SFIs include the Government Savings Bank, GH Bank, the Bank for Agriculture and Agricultural Cooperatives, the Export-Import Bank of Thailand, the Islamic Bank of Thailand, the Small and Medium Enterprise Development Bank of Thailand and the Thai Credit Guarantee Cooperation.

Some SFIs have been saddled with high levels of non-performing loans, making it necessary for the Finance Ministry to provide fresh funds.

In a related development, the FPO has proposed a reform plan for SFIs to the National Council for Peace and Order.

Mr Kritsada said the reform plan focused on the business role of SFIs and discouraged them from vying with commercial banks.

The Finance Ministry recently made it clear that SFIs should concentrate on grass-roots borrowers, providing microfinance services to enable them to shun loan sharks.

Mr Kritsada said the FPO would propose that the National Legislative Assembly (NLA) deliberate a draft bill setting up a fund to be a financing source among SFIs to boost their financial liquidity.

If the NLA gives the nod to the draft bill, the fund will be set up and SFIs required to contribute to it.

The contribution of each SFI would vary, depending on their deposit base.

The idea of incorporating the fund was floated following commercial banks' outcry and demand for a level-playing field between them and SFIs, as the latter are not subject to a 0.47% contribution of outstanding deposits.

Of the total 0.47% deposit tax, 0.01% is contributed to the Deposit Protection Agency and the remaining 0.46% used to repay the 1 trillion baht debt the Bank of Thailand'sFinancial Institutions Development Fund incurred from bailing out financial institutions during the 1997 meltdown.


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Source: Bangkok Post (Thailand)

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