The Bank of Thailand’s draft regulations on supervising specialised financial institutions (SFIs) are expected to be completed by the third quarter, says a senior central bank official.
The central bank will forward the draft to the finance minister after reaching an agreement with SFI executives, and the regulations will be announced after gaining the minister’s approval, said Tongurai Limpiti, the deputy governor overseeing financial institutions' stability.
She said the regulations were expected to win Finance Ministry approval by the beginning of next year.
Tongurai: Regulations in line with Basel II
The central bank yesterday met with chief executives and chairmen of SFIs to discuss the central bank’s move.
They included the Government Savings Bank (GSB), Small and Medium Enterprise Development Bank of Thailand, Bank for Agriculture and Agricultural Cooperatives, GH Bank, Thai Credit Guarantee Corporation, Islamic Bank of Thailand and Export-Import Bank of Thailand.
The cabinet approved the move for the central bank to supervise SFIs last December after several state-backed banks became saddled with high bad loans due to imprudent lending.
Mrs Tongurai said the central bank’s main areas of SFI supervision would consist of good governance, capital adequacy ratio requirements, liquidity management, sound loan procedures, information transparency and clear accountability in terms of policy implementation.
Regulations on SFIs’ banking capital and related risks would be in accordance with the Basel II accord, Mrs Tongurai said.
At present, commercial banks are required to meet the tougher standards of the Basel III accord.
Regulations on SFI supervision must be different from those of commercial banks because SFIs have different missions, while supervision regulations should be tailored to match each SFI’s business operations, GSB president Chatchai Payuhanaveechai said.
He said the GSB’s outstanding loans totalled 1.77 trillion baht in the first quarter, while deposits were registered at 1.9 trillion.
Non-performing loans stood at 1.7% to 1.8% of total loans as of March 31, and the GSB plans to cap its NPLs at 1.7% by year-end, Mr Chatchai said.
The bank’s 6% loan growth target for this year will be discussed further with the State Enterprise Policy Office, as that target is set in a scenario where economic growth is projected to reach 4%, he added.