Thai banks ready for new deposit protection limit
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Thai Bankers Association announced today that its bank members are ready for the new deposit protection limit, thanks to their financial strengths and preparations having been launched in the past months.
Starting on August 11, 2015, deposits worth up to Bt25 million at a bank will enjoy the automatic legal protection under the Deposit Insurance Act. Prior to this, the protection limit was set at Bt50 million per bank.
Kobsak Duangdee, secretary-general of the association, said that at the end of 2014 the Thai banking system's capital-adequacy ratio stood at 16.8 per cent, well above the requirement of 8.5 per cent.
There is little chance that Thai banks would face a similar crisis like in 1997, he noted. However, the deposit protection rules are applied accordingly to international standards.
"The new protection limit will not affect depositors. From over 67.2 million depositors in Thailand, depositors with savings below Bt25 million account for 99.94 per cent," Kobsak said.
There were fears that once the limit is lowered, deposits would flow from small banks to large banks.
The Deposit Insurance Act was enacted following the 1997 financial crisis.
