The law governing commercial banks in Thailand is the Commercial Banking Act B.E. 2505 (1962) and its 2nd and 3rd amendments namely B.E. 2522 (1979) and 2535 (1992) respectively. This act directly regulates the "commercial banking" activities and the operation of all commercial banks and branches of foreign banks in Thailand. "Commercial banking" means the business of accepting deposits of money subject to withdrawal on demand or at end of a specified period and of employing such money in one or several way such as:
(a) granting of credits
(b) buying and selling of bills of exchange or any other negotiable instrument
(c) buying and selling of foreign exchange
"Commercial bank" means a bank licensed to undertake the business of commercial banking and included a branch of a foreign bank licensed to carry on such business.
This means to lend money, buy, discount or rediscount bills, become a creditor upon having paid or ordered that an amount of money be paid on behalf of a customer, or become a creditor upon having paid in accordance with an obligation specified in a letter of credit. No person other than a commercial bank can undertake the business of commercial banking.
The business of commercial banking may be undertaken by a branch of a foreign bank only after having obtained a license from the Minister. Such license may be granted with conditions to be complied with.
Branches of foreign banks licensed to undertake the business of commercial banking shall maintain assets in Thailand at not less than Baht 125 million in value.
To upgrade and attempt to make Thailand a financial centre in South East Asia, many incentives have been developed such as, the Bank of International Settlement Rules (BIS), the giving up of the limitation of the interest rates, liberalisation of the currency control mechanism, allowances to bank to issue debt instruments such as Negotiable Certificate of Deposits (NCD), etc. Moreover, banks are allowed by the Bank of Thailand to do certain types of securities business. Currently, Thailand has settled the International Banking Facilities named Bangkok International Banking Facilities (BIBF)
International Banking Facilities means those banking units which have been permitted to operate international banking facilities for off-shore lending, for domestic lending, or other international business activities.
International banking facilities for off-shore lending means undertaking the following activities :
(1) accepting deposits or borrowing in foreign currencies from sources outside the country, or to other international banking facilities, the Ministry of Finance, the Bank of Thailand, or the Exchange Equalisation Fund,
(2) accepting deposits or borrowing in foreign currencies from other international banking facilities, the Ministry of Finance, the Bank of Thailand or the Exchange Equalisation Fund for the purpose of lending in foreign currencies outside the country, or to other international banking facilities the Ministry of Finance, the Bank of Thailand, or the Exchange Equalisation Fund,
(3) accepting deposits or borrowing in Baht from sources outside the country, from foreign banks, or foreign branches of Thai commercial banks, for the purpose of lending in Baht to foreign banks outside the country, foreign branches of Thai commercial banks, or other international banking facilities.
(4) accepting deposits or borrowing in Baht from other international banking facilities for the purpose of lending in Baht to foreign banks outside the country, foreign branches of Thai commercial banks and other international banking facilities.
International banking facilities of domestic lending means undertaking the following activities :
(a) accepting deposits or borrowing in foreign currencies from sources outside Thailand for the purpose of lending in foreign currencies in Thailand where the draw-down of the loan shall not be less than prescribed by the Bank of Thailand;
(b) accepting deposits or borrowing in foreign currencies from other international banking facilities for the purposed of lending in foreign currencies in Thailand where the draw-down of the loan shall not be less than the amount prescribed by the Bank of Thailand.
The establishment of BIBF shall offer convenience are reduce expenses to Thai businessman lending money from abroad, and shall be an important which to reduce the loss of the Current Account. Moreover, it should help the financial system to become more integrated.
NOTE: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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