The Bank of Thailand is preparing to issue the accounting and financial reporting standards for specialised financial institutions (SFIs) to better reflect borrowers' actual risks and strengthen financial fundamentals for banks, says a Fiscal Policy Office (FPO) source.
The move will also prevent an additional fiscal burden shouldered by the government, according to an FPO source speaking on condition of anonymity.
The central bank has conducted a public hearing on accounting standards for SFIs, which has to align with the International Financial Reporting Standards 9 or IFRS9, by taking into account opinions on the draft regulation on the accounting and financial reporting standards required by state-owned SFIs.
Relevant parties will have to submit their responses by Feb 26.
The Finance Ministry earlier allowed the central bank to issue the accounting and financial reporting regulations associated with state-owned banks in line with the way in which the ministry permitted these banks to delay adopting the Thai Financial Reporting Standards 9 or TFRS9, a local equivalent of the IFRS9, by five years from Jan 1, 2020 to Jan 1, 2025.
It is imperative to establish guidelines on the implementation of accounting and financial reporting standards that are relevant to financial instruments adopted by SFIs, with sufficient time in order to prepare the adoption of TFRS9.
SFIs will have to gradually set aside capital reserves that have a sufficient threshold to reflect the actual risks of debtors, strengthen the financial status and stability of state-owned banks and prevent implications on future financial burdens for the government, said the source.
An SFI has a pivotal role in meeting legal obligations and promoting financial inclusion for vulnerable customer groups. They also serve as channels for implementing public policies to reduce the impact during an economic crises or slowdown, as well as supporting an economic recovery by providing credit to the public and business sectors.