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Published on November 29, 2007

An extraordinary House panel of the National Legislative Assembly (NLA) has revised upwards the maximum deposit guarantee under the new law.

The NLA yesterday also approved the Financial Institutions Business Bill. The interim government is expected to implement both laws within its term.

According to the new draft of the Deposit Insurance Bill, the government will give a blanket guarantee of deposits in the first year, Bt100 million per person per bank in the second year, Bt50 million in the third, Bt20 million in the fourth and Bt1 million in the fifth.

The guarantee limit has doubled in the second to fourth years.

"The new draft is more flexible, opening the way to raise or reduce the guarantee limit in the future as no one is able to foresee future economic conditions. For example, if we have economic problems, there might be a need to raise the maximum guarantee to boost depositors' confidence," Sommai said.

Sommai added that the bill would be considered by the panel for the last time before being submitted for the second and third reading by the NLA.

The NLA yesterday also approved the second and third readings of the Financial Institutions Business Bill.

However, Bank of Thailand Governor Tarisa Watanagase said ACL Bank's share sale by Bangkok Bank to Industrial and Commercial Bank could not be carried out immediately, as there are still further procedures before the law can be enforced.

The draft law allows foreign banks to hold up to 49 per cent of shares in local banks, from an earlier limit of 25 per cent. ACL Bank's share sale is expected to be the first case that is subject to the new law. However, the act needs to be announced in the Royal Gazette and will be officially implemented 180 days after that date.

The Nation