Cabinet nod to reinstated FIDF role
The Cabinet Wednesday approved a draft law empowering the Bank of Thailand to resume the role of the Financial Institutions Development Fund to collect money from banks for a fund to bail out financial institutions during a financial crisis.
The central bank’s FIDF played a vital role in bailing out cash-strapped financial institutions during the 1997 financial crisis in addition to its usual responsibilities of guaranteeing full repayment to depositors and creditors to maintain public confidence and system stability.
After the 1997 crisis, the FIDF gradually wound down its roles. In 2003 it trimmed its guaranteeing responsibilities to only depositors and eventually ceased providing such guarantees altogether after the Deposit Protection Agency Act came into force on August 11, 2008.
The FIDF’s current role is limited to managing its own assets.
Kittiya Todhanakasem, chief financial officer of Siam Commercial Bank, said the FIDF should take on vital roles as it did in the past, but in practical terms, the bank does not think the BOT will assign the FIDF to collect money from banks, as they now pay 0.47 per cent of their deposit base to FIDF and the Deposit Protection Agency.