State banks help more Thais to join financial system
Kuala Lumpur: Thailand is among several countries in the East Asia and Pacific region to record an increase in financial inclusion thanks to greater financial services offered by state-owned banks, says a World Bank senior economist.
Thailand registered a higher rate of financial inclusion among adults aged 15 and over at 78% in 2014, up from 73% in 2011, according to the World Bank's 2014 Global Findex Report.
Credit borrowed from financial institutions for these adults was registered at 15% last year, down from 19% in 2011, while last year's formal savings edged down 2% to 41% from 43% registered in 2011.
"Many institutions have been created to help advance financial inclusion such as the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BACC)," said Jose de Luna Martinez, a Bangkok-based senior financial economist at the World Bank.
"They have played a very important role."
The GSB has focused on providing loans to low-income people living in urban areas and promoting savings habits among youth, while the BACC caters to farmers and agricultural cooperatives.
Mr de Luna said loans offered by the informal sector, particularly loan sharks, to low-income individuals continue to be a major problem in Thailand.
"This is an area that needs to be looked at urgently. It is the biggest short-term challenge in our view. We do not want this type of financial inclusion [because] we want financial inclusion where services have reasonable costs and people can use them for their benefits," he said.
Putting a greater emphasis on online banking is another challenge that Thailand should overcome to reduce the reliance on unsecured informal channels, said Mr de Luna.
East Asia and the Pacific had the highest rate of account ownership among developing regions in 2014, with 69% of adults having an account at a financial institution or through a mobile money provider, an increase from 55% recorded in 2011.
Malaysia, Singapore, and Thailand lead inclusion rates in the Asean region, with about four of five adults benefiting from access to financial services and able to save, borrow, and manage risks.
Globally, the report found that the percentage of adults with an account increased from 51% in 2011 to 62% in 2014, a trend driven by a 13% rise in account ownership in developing countries as well as improved technology.
Mobile money accounts in developing countries particularly support the rapid expansion and better access to financial services.
Digitising bank accounts can improve regional financial inclusion by boosting account ownership, but infrastructure investment is needed to facilitate this plan, said Peter van Oudheusden, the World Bank's Washington-based consultant for finance and private sector development.
Bank Negara Malaysia governor Zeti Akhtar Aziz said financial inclusion remains an increasing priority because it is estimated that 260 million adults in the region still do not have access.