The banks, however, prefer that the central bank revoke the withholding measure completely rather than any sort of relaxation, which would still cause higher operating costs for banks.

About 100 treasurers from private and state-owned banks convened yesterday at the BOT, where the central bankers asked them for any comments on the idea to ease its withholding measure. The BOT will hold a meeting today with brokerage companies to discuss the effects of the measure on other securities.

Most banks agree with the BOT that non-resident investment in debt instruments with more than three months' maturity would not need to comply with the remunerated reserve requirement if they fully hedged their foreign currency and invested via custodian banks.

Earlier, BOT Governor Tarisa Watanagase said she had considered waiving the 30-per-cent reserve requirement for non-residents under particular conditions.

However, a banking source said the relaxed measure was not yet clear and indeed seemed contradictory. He said he hoped it would be better clarified by the central bank before implementation.

Another source said he wanted the BOT to revoke the withholding measure totally, because banks would otherwise continue to carry higher costs. "But the relaxation is still better than nothing," he said.

Yesterday's meeting also discussed the relaxation on property funds, but the issue was not resolved.

Anoma Srisukkasem

The Nation