Effectiveness of monetary policy concerns KTB chief
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The Bank of Thailand (BOT)'s monetary policy might lose its effectiveness in influencing the market if state-owned banks are excluded, a leading banker says.
Apisak Tantivorawong, president of the state-owned Krung Thai Bank, said after the Thai Bankers Association's video conference on Wednesday that commercial banks are willing to contribute extra fees if state-owned banks are required to do the same.
He added that commercial banks have faced stiff competition on deposit mobilsation from state-owned banks. Their market share has risen to 30 per cent.
He said that if state-run banks, which are regulated by the Finance Ministry, are not required to pay a higher fee, the central bank cannot effectively influence the market through its monetary policies.
He was concerned that commercial banks may not cut their rates even when the Monetary Policy Committee reduces the policy rate.
Since the policy rate was cut late January, only KTB and TMB Bank have cut their rates accordingly. This implied that other banks cannot afford to cut rates or deposits will flee.
The association proposed two options to the Bank of Thailand (BOT) on how to deal with the Financial Institutions Development Fund (FIDF)'s interest burden. The burden in the 2012 fiscal year is Bt68 billion. The government now requires commercial banks to contribute fees on deposits to help pay for the interest. State-owned banks are excluded, though.
Apisak did not reveal the options but said that bankers discussed about the period of the fee hike. If the rate is high, the period should be short, he said.
