Aug. 18--The Fiscal Policy Office (FPO) will review the deposit guarantee reduction to see if lowering the guarantee ceiling to 25 million baht per depositor per bank, effective Aug 11 next year, will significantly tighten liquidity in the banking system and lead to a panic among depositors.
The Finance Ministry's think tank insisted any recommendation it makes is not aimed at helping the rich, said Kritsada Jinavijarana, director-general of the FPO.
From Aug 11, 2015 to Aug 10, 2016, the deposit guarantee ceiling will be halved to 25 million baht per depositor per commercial bank, from 50 million at present. The amount will be lowered again to 1 million baht from August 2016.
He said those with deposits over 50 million baht represent 1% of depositors in Thailand and they typically have access to wealth management channels to mitigate risks.
Benjarong Suwankiri, a first vice-president and team head at TMB Analytics, earlier commented that liquidity in the local commercial banking system was expected to tighten next year in the wake of a lower maximum for guaranteed deposits, an economic rebound and other investment instruments attracting yield-hungry savers. Some unprotected deposits are likely to flee to state-owned banks, whose majority shareholder, the Finance Ministry, can provide a blanket guarantee against bankruptcy.
Deposits in the commercial banking sector total 10 trillion baht, and half will not be guaranteed by the Deposit Protection Agency (DPA) when the ceiling is halved to 25 million.
Some 35 financial institutions are members of the DPA, with each required to contribute 0.47% of their deposits outstanding to the DPA and the Financial Institutions Development Fund (FIDF).
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