Reduction in deposit guarantee to be delayed

He said the ministry would send the proposal to the Cabinet for consideration soon in order to enact a decree to extend the Bt50-million deposit guarantee.
“The European financial volatility is shaking the confidence of depositors, and it might not be the right time to reduce the protection. Therefore, we believe the deposit guarantee of Bt50 million is safe and will restore the confidence of depositors,” he said.
Singha Nikornpun, president of the Deposit Protection Agency (DPA), said that while the Bt50-million deposit guarantee should be extended during the European financial problems, a time limit should be set. The deposit guarantee should fall to Bt1 million per person per bank according to the law eventually, Singha said, because the amount is able to protect 99 per cent of depositors. If the deposit protection has maintained at Bt50 million, means about 10,000 accounts of total 60 million accounts would not be protected.Moreover, depositors who have deposit of Bt50 million are affluent persons, he said.
Sasithorn Pongsathorn, president of Land and Houses Bank, recently urged the government to maintain the deposit protection at Bt50 million, saying the timing was not right to lower the protection to Bt1 million this August, given the global economic volatility.
The growth of the Thai economy was driven by money markets more than capital markets, but about 75 per cent of depositors who are key drivers of the Thai economy are not protected due to the lower protection, she said.