BoT directing basic bank account charge
The Bank of Thailand has joined with 16 banks to offer a basic bank account with fee-free deposits and no minimum balance requirement, aimed at widening opportunities for the unbanked to access financial services and digital banking.
In the early stage, the interest-bearing bank accounts will be offered only to those aged 65 and older, as well as low-income earners who are recipients of the government’s welfare and subsidy scheme, said Bank of Thailand governor Veerathai Santiprabhob, adding that deposit accounts will be available in October.
Deposit account availability will be extended to other types of depositors in the next phase, he said yesterday at the Bangkok Sustainable Banking Forum 2018 hosted by the central bank.
The 16 financial institutions comprise 14 commercial banks and two state-owned banks: Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives.
A central bank survey found that 30% of Thai households in 2016 were unable to access financial services, up from 20% three years ago.
The government is giving a monthly living allowance of 200-300 baht to 11.4 million people earning no more than 100,000 baht a year to buy staple goods at Thong Fah Pracha Rat shops. Those who participate in the government’s sponsored job training programme receive an additional living allowance of 100-200 baht a month.
Some 5.3 million out of 11.4 million recipients of the government’s welfare and subsidy scheme are living below the national poverty line, set at 30,000 baht a year.
“Under-served people have low income and opening normal deposits accounts entails high expenses,” said the central bank governor. “These are the key reasons barring them from accessing deposits service, so the basic banking account will help reduce social inequality and partly improve the country’s financial sustainability.”
Mr Veerathai said financial service accessibility is a fundamental right, like education and medical care, adding that a basic banking account will also open more opportunities for those at the bottom end of the income scale, giving them access to financial products and services, particularly loans.
He said offering basic banking accounts is part of central bank efforts to steer the country toward financial sustainability.
Chartsiri Sophonpanich, president of Bangkok Bank, said basic bank account holders can make transactions including money deposits, withdrawals and transfers through ATMs or debit cards without any fees. Banks will also waive entrance and annual fees for account holders.
The account scheme is part of the five-year business plan of The Thai Bankers’ Association.
The deposit scheme would is also intended to even income distribution and savings, as well as encourage more people to use digital banking services, he said.
Meanwhile, Kasikornbank chief executive Banthoon Lamsam proposed that the Bank of Thailand lower the cap for the single lending limit (SSL), a rule that limits credit exposure to firms under the same group at 25% of the first-tier capital. He said the change would give companies better access to a variety of financial sources, adding the too-high SSL cap can lead to economic disparity.
But Mr Veerathai said the central bank will maintain the 25% SSL ceiling, adding any new measure must first be thoroughly considered.
Somboon Chitphentom, assistant central bank governor, said that no bank has thus far hit the lending limit.