BoT paper eyes rejig of the financial sector
Banks may obtain more than 1 licence
The Bank of Thailand plans to allow commercial banks to obtain more than one banking business licence, including a planned virtual bank licence, to pave the way for the country's digital economy.
The central bank on Tuesday issued a public consultation on the topic of "Repositioning Thailand's Financial Sector for a Sustainable Digital Economy" to lay out the central bank's underlying principles and policy directions for a new financial landscape, said governor Sethaput Suthiwartnarueput.
The repositioning of the financial sector needs to strike the right balance between promoting innovation and managing risk, as well as allowing for flexibility in dealing with abrupt changes.
The central bank is open to comments and suggestions from all sectors to ensure the direction and policies properly serve the needs of all stakeholders. The public hearing is scheduled to continue through Feb 28.
In the consultation paper, the central bank provides greater flexibility for traditional banking business operations and welcomes new innovative players, including fintech companies, digital banks, virtual banks and others, said Roong Mallikamas, the Bank of Thailand's assistant governor for financial institutions policy group.
Mrs Roong said the central bank is considering relaxing its rule limiting commercial banking licences to one per institution, allowing latitude for the planned virtual banking licence.
The central bank has been drafting regulations for a virtual banking licence and plans to hold a public hearing of its consultation paper.
The draft is expected to be completed in the first half of this year.
In addition, the central bank is considering allowing banks to invest in fintech companies at a rate exceeding the existing limit of 3% of a bank's capital base. The relaxation would depend on the risk level of the business area.
The central bank is more concerned about risk in relation to digital assets and aims to govern such businesses with a high degree of caution.
In particular, the regulator does not support digital assets as a means of payment.
"Balancing between innovation development and risk management, the central bank will consider the benefits of related parties and strive to strengthen the resiliency of the financial system while moving Thailand towards the digital economy sustainably," Mrs Roong said.
She said the central bank also plans to upgrade the supervision and standards of non-bank business operations, especially for macroprudential policy and market conduct.
If the Bank of Thailand implements macroprudential measures to govern financial institutions in the future, it will cover non-banks as well, such as loan-to-value measures to supervise mortgage products, said Mrs Roong.
The central bank has not set a specific timeline for the implementation of new regulations following this consultation.
Regarding a new financial landscape, the bank expects the financial sector will leverage technological advancement to drive innovation and provide inclusive financial services and consumer protection on a level playing field in a competitive environment, she said.
A new landscape would facilitate the transition of businesses and households to a digital economy, as well as effectively manage environmental risks, said Mrs Roong.
This landscape would be resilient to significant emerging risks without transmitting them to the system or consumers, according to the central bank.
The Bank of Thailand proposes a more flexible regulatory framework that places the minimum regulatory burden on financial service providers.
- financial sector