The Deposit Protection Agency (DPA) plans to safeguard customers' accounts at the proposed virtual banks, with the agency preparing its internal operations in line with this new offering.
According to the Deposit Protection Act, the agency guarantees customers' deposits at financial institutions under the Bank of Thailand's Financial Institution Business Act.
Under the central bank's related regulations, virtual banks will be covered by the Financial Institution Business Act, so depositors will receive protection from the DPA, said agency president Songpol Chevapanyaroj.
In addition to deposit protection and reimbursement, the DPA also helps with liquidation if a bank collapses and needs to return its business licence to the central bank.
The DPA would facilitate a virtual bank's exit in such a situation.
In other countries, some virtual banks have been unable to compete and needed to exit, leading to deposit protection agencies quickly reimbursing money to depositors and liquidating the banks.
For instance, Taiwan's deposit protection agency takes only one day to repay money to depositors if one of its virtual banks collapses. Virtual banks' business operations and contracts with their customers or related parties are normally less complex than traditional banks. As a result, reimbursement and the liquidation process tends to be faster.
On Thursday the DPA also unveiled its new five-year roadmap (2023-2027) that outlines four key strategies to support its vision of being a modern deposit protection organisation, while also instilling trust among depositors and the public.
Mr Songpol said the DPA is continuing to improve the efficiency of business in this fourth phase of operations following its establishment in 2008, partly to cope with the future virtual banks.
The Deposit Protection Act requires the DPA to complete the reimbursement and liquidation process within 30 days.
Given its efficient infrastructure base, the DPA believes it can repay money to depositors within seven days.
The DPA links its databases to more than 30 commercial financial institutions, including local banks, foreign banks and non-banks, in addition to collaborating with financial safety-net organisations such as the Finance Ministry, the central bank and the Securities and Exchange Commission in order to strengthen operations and market supervision, Mr Songpol said.
People with deposits of up to 1 million baht per account per bank receive protection from the DPA for the full amount. As of October 2022, the number of depositors under DPA protection was 87.9 million, representing 98% of total depositors. The ratio is higher than in regional peer countries, said the agency.
As of the end of October last year, the overall number of depositors in Thailand was 89.7 million, a 4.46% increase from the end of 2021. The total deposit protection in October 2022 amounted to 16.1 trillion baht, rising 3.36% year-on-year.
"This year, both depositor numbers and deposit amounts will continue to grow in a range of 4-6%, in line with improving economic activities in Thailand and higher completion of deposit products in the banking sector," he said.