Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Thailand
Country Indicators
Information Last Updated
March 2004
Population (Millions)
64.2 [2005]
Population Density (per sq km)
126 [2005]
GNI per capita (US$)
2750 [2005]
GNI per capita (PPP US$)
8440 [2005]
Total Unemployment (% of labor force)
2 [2004]
Employment in Agriculture (% of total employment)
45 [2003]
Gross domestic saving (% of GDP)
29 [2005]
% Population under $2/day (PPP)
26 [2002]
Depth of Financial Sector (M2/GDP)
90 [2005]
Exchange rate
1 USD : 39.24764 THB, as of 30 January 2004.
Ownership structure of banks (and financial institutions if available)
Five commercial banks own most of the market share.
Formal and Semi-Formal Sources of Microfinance
Commercial banks (including retail banks that target the SME sector), the Bank for Agriculture and Agricultural Cooperatives (BAAC), cooperatives.
Moneylenders, traders, input suppliers, friends, and relatives
Definitions of microfinance or microcredit
No legal definition exists
Ongoing microfinance policy development status
A bill has been introduced to transform the BAAC into a rural development bank. The Bank of Thailand is also in the process of restructuring the banking sector such that there are windows for both commercial banks – which conduct a range of financial services and have higher capital requirements – and retail banks – which serve retail and SME customers only and have smaller capital requirements. Finance companies and credit financer companies must then transform into one of the two types of banks. This restructuring is planned for the period 2004-2007. (See “The Content of the Financial Sector Master Plan” at the Bank of Thailand website.
A financial institution engaged in accepting deposits, giving loans, and other types of financial activities as described below. “Retail banks” licensed under this act provide funding to small and medium enterprises.
Accepting demand deposits and using them to give loans, buy and sell negotiable instruments, or engage in foreign exchange. (See CB Act Sect. 4)
Cooperatives/Credit Unions
Cooperatives
The Cooperative Societies Act B.E. 2511 (1968)
Regulation on the establishment of Savings and Credit Cooperatives in communities B.E. 2521 (1978)
A group of persons who jointly conduct affairs for mutual assistance (See Cooperative Societies Act 4)
Ministry of National Development (See Cooperative Societies Act 6) may issue regulations; Registrar of Cooperative Societies may conduct supervisory inspections
Providing financial services among members
Government lending funds and special purpose institutions
Bank for Agriculture and Agricultural Cooperatives (BAAC)
No person shall hold more than 5% of the bank’s shares except government agencies, state enterprises, or other persons established under law. Thai nationals must hold at least 75% of the total shares. (See CB Act, Sect. 5)
Cooperatives/Credit Unions
Cooperatives
The Cooperative Societies Act B.E. 2511 (1968)
Regulation on the establishment of Savings and Credit Cooperatives in communities B.E. 2521 (1978)
Registrar of Cooperatives
Limited cooperative society or an unlimited cooperative society (See Cooperative societies Act 7)
Must be comprised of at least 50 members and 500 potential members (See Cooperative regulations 3)
Government lending funds and special purpose institutions
Bank for Agriculture and Agricultural Cooperatives (BAAC)
BAAC shares are held by the MoF, and individual farmers, farmers’ groups, agricultural cooperatives, and other financial institutions (See BAAC Act, Sect. 7)
Licensing Requirements and Standards
Standards for ownership officers
Feasibility study/business plan
Banks
Commercial Banks
Three-fourths of directors must be Thai (See CB Act Sect. 5). Owners and officers must not have been bankrupt or imprisoned, discharged from government service, previously fired from a position in a commercial bank, be a shareholder of a company currently borrowing from the bank (See CB Act Sect. 13). Managers must have at least five years relevant experience (See Notification of MoF re: Rules, Procedures, and Conditions for Establishing a Commercial Bank, Art. 7)
Business plan with project financial statements of no less than 3 years is required (See Notification of MoF re: Rules, Procedures, and Conditions for Establishing a Commercial Bank, Art. 7)
Cooperatives/Credit Unions
Cooperatives
All members of an unlimited cooperative society must be residents of the same or neighboring tambons. (See Cooperative societies Act 57)
Government lending funds and special purpose institutions
Bank for Agriculture and Agricultural Cooperatives (BAAC)
BAAC Board chair is the Minister of Finance (MoF); other board members appointed by the Council of Ministers (See BAAC Act, Sect. 14). Board chair, members, and directors of the BAAC must not be employees of the Bank, have been or be bankrupt, have been imprisoned (except for petty offenses), and must be competent. (See BAAC Act, Sect. 15) BAAC manager must be Thai (See BAAC Act, Sect. 20)
Capital and Reserves
Minimum capital
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Commercial Banks
1st-tier funds at least US $126.9 million (5 billion THB) for commercial banks and US $6.34 million (250 million THB) for retail banks (See Notification of MoF re: Rules, Procedures, and Conditions for Establishing a Commercial Bank, Art. 11.3) (1st tier funds include paid-up capital, statutory reserves, reserves appropriated from net profits, and net profits after appropriations)
Liquid assets shall be no less than 6% of all deposits, foreign borrowings with less than one year maturities, and total borrowings with returns linked to variables. Liquid assets should be in the form of deposits with the Bank of Thailand (no less than 1%), cash in hand (not exceeding 2.5%), and unencumbered securities. (See Notification of the BoT re: Prescription on Maintenance of Liquid Assets by Commercial Banks, 30 July 2003, Art. 2,3)
Cooperatives/Credit Unions
Cooperatives
Definitions for capital and its division into shares, values, and payments of share values will be outlined in each cooperative’s regulations (See Cooperative Societies Act 14(5))
Withdrawals from the reserve account allowed only for directly compensating a loss (See Cooperative Societies Act 32, 62).
At least 10% of net profit of limited cooperative societies shall be used as reserves; 5% must be given to the Cooperative League of Thailand (See Cooperative Societies Act 31)
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Commercial Banks
Permitted: Deposits, loans, foreign exchange, letters of credit, guarantees
Prohibited:
Opening new branches requires Minister of Finance’s authorization (See CB Act Sect. 6)
The CB has the power to proscribe interest rates (See CB Act Sect. 13)
Cannot hold shares of another limited company in excess of 10% of that company’s shares (See CB Act Sect. 12). For retail banks lending to small and medium enterprises, SME loans can not exceed 10% of first-tier capital. (See Notification of MoF re: rules, procedures, and conditions for establishing a commercial bank)
Cannot grant credit or invest in any one person or business above 25% of 1st tier capital funds, less then amount of credit risk protection provided (See Bank of Thailand Notification re: Prescription on ratio of credits granted dated 8 Jan 2002, Art. 3)
No credit or guarantees to be given to a director and his/her family or business partners (See CB Act Sect. 12)
Cooperatives/Credit Unions
Cooperatives
Permitted: Loans to and deposits from members (See Cooperative Societies Act 21[4,5])
None.
No member may hold more than one-fifth of the total shares (See Cooperative Societies Act 11)
No restrictions given regarding loans to officials.
Government lending funds and special purpose institutions
Bank for Agriculture and Agricultural Cooperatives (BAAC)
Permitted: loans; guarantees; buy, sell, or pledge moveable and immovable properties; deposit-taking (See BAAC Act, Sect. 10)
Prohibited: connected lending
Deposit rate set by the Bank of Thailand as of April 2004 set at 0.75% p.a. for normal savings and 1.0% p.a. for special savings. Lending rates for individual farmers range from 8-14% p.a. and for farming institutions from 5.5-10.5% p.a.
Total BAAC debts can not exceed 20 times the sum of paid-up capital, reserves, and accumulated profits (See BAAC Act, Sect. 34)
No credit to director, managers, or their spouses (See BAAC Act, Sect. 11)
Reporting and Supervision
Supervision Method
Disclosure and reporting requirements
Banks
Commercial Banks
On-site inspections conducted at least annually
Monthly financial statements (See CB Act Sect. 15)
Quarterly reports
Annual financial statements must be published (See CB Act. Sect. 16)
Cooperatives/Credit Unions
Cooperatives
Registrar of Cooperative Societies may conduct surprise inspections
Annual report and balance sheet must be sent to the Registrar of Cooperative Societies (See Cooperative Societies Act 39). Registrar will annually appoint an auditor to audit the accounts (See Cooperative Societies Act 44)
Government lending funds and special purpose institutions
Bank for Agriculture and Agricultural Cooperatives (BAAC)
BAAC Board requires yearly auditing of financial statements by an outside auditor (See BAAC Act, Sect. 38)
Tax Treatment
Taxes on Income
Taxes on Transactions
Other
General Applicability
General Applicability
Corporate income tax rate (2005): 30% (profit remittances tax: 10%); individual income tax rate: progressive, up to 37%; capital gains are taxed as income. [All information in this section from Deloitte, 2005.]
