"We foresee high competition among commercial banks to attract depositors, so we have to offer a new product," BAAC president Thirapong Tangthirasunan said yesterday.

Although the BAAC's new product does not offer the highest return among banks' fixed-time deposits, interest is exempted from 15-per-cent withholding tax, he said, as the BAAC - as a state-owned bank - enjoys privileges given by the Finance Ministry.

At the moment, Thanachart Bank provides the best return to depositors with an annual interest of 5.25 per cent on nine-month deposits, while Siam Commercial Bank offers 5 per cent per year for the same period.

However, in both cases the interest rates are subject to 15-per-cent withholding tax and therefore their net return is not very different from that offered by the BAAC.

Thirapong added that depositors would receive an advance interest payment of 4.25 per cent per year as soon as they deposit Bt50,000 in the nine-month savings account.

The remaining 0.25-per-cent return will be paid once the nine months have been completed. After that, the rate of return will change according to whatever special rate the BAAC offers at the time, he said.

However, if depositors withdraw savings before the nine months are up, they will be charged 3.25 per cent on the withdrawn amount, Thirapong said.

He expects the new deposit accounts to bring in Bt20 billion. Currently, the bank has Bt462.18 billion of deposits, of which 51 per cent are savings accounts and 49 per cent are fixed-time deposit accounts.

Wichit Chaitrong

The Nation