The Bank of Thailand is requiring four specialised financial institutions (SFIs) to apply a cap on the single lending limit (SLL) of 15% of capital funds, while two other SFIs have a cap of 25%, effective from Oct 1.
Government Savings Bank (GSB), the Bank for Agriculture and Agricultural Cooperatives (BAAC), GH Bank and the Small and Medium Enterprise Development Bank (SME D Bank) are required to adopt the ceiling SLL of 15% of their capital funds, the central bank said in a release.
The Export-Import Bank of Thailand (Exim Thailand) and the Secondary Mortgage Corporation (SMC) must limit their lending to a single group of firms at 25%.
Commercial banks are restricted to loan extensions to a particular group of companies at 25% of each bank's capital fund.
The cabinet approved a change in December 2014 allowing the central bank to regulate SFIs, taking over from the Finance Ministry.
The SLL for SFIs is part of a raft of central bank regulations to oversee such state-backed institutions released on Thursday. Others rules include a minimum requirement for capital adequacy ratio of 8.5% and a loan-to-value ratio for mortgage lending.
Seven SFIs are required to maintain their minimum capital adequacy ratio at 8.5% of risk-weighted assets, of which at least 4.25% must be first-tier capital, and second-tier capital must not exceed the tier-one level. These SFIs are GSB, BAAC, GH Bank, SME D Bank, Exim Thailand, Thai Credit Guarantee Corporation (TCG) and SMC.
"Pillar 2 stipulates that SFIs' CAR (capital adequacy ratio) should exceed Pillar 1's minimum requirement to cushion risks beyond Pillar 1, such as interest rate on banking book and risks incurred from debtors' concentration," the central bank said. "Pillar 2 also requires SFIs to have good risk management under which SFIs must be equipped with a process to evaluate adequacy of capital concerned with all risks, and they must have an appropriate stress test."
The Bank of Thailand might require TCG to make additional CAR if it provides loan guarantees aside from the portfolio guarantee scheme.
For LTV, the central bank has applied the same rule as for commercial banks to GSB, BAAC, GH Bank, Islamic Bank of Thailand, SME D Bank, Exim Thailand, TCG and SMC.
Homebuyers, starting from April 1, are required to make a minimum down payment for third and subsequent mortgages of 30% of the home price, with second mortgages set at 10-20%, depending on how long a borrower has made payments on the first one.
The LTV ratio of 90-100% remains unchanged for those who apply for a first mortgage to buy a home priced below 10 million baht, but the ratio is lowered to 80% when the borrower buys a residence valued at 10 million baht or higher.
A source in banking circles said the regulations to oversee SFIs are in line with the Finance Ministry's agreement to authorise central bank supervision.
Even so, some regulations applied to SFIs remain more lenient than those for commercial banks because the government provides a guarantee for the former, the source said.