ACL Bank offers risk-free bills

Depositors are now able to invest in bills of exchange and feel more relaxed about risks and flexibility, as ACL Bank has introduced a system in which its bills of exchange (B/Es) can be converted into fixed-deposit accounts anytime without penalty or loss of return.

Senior executive vice president Apichart Kasemkulsiri said the new savings product was in response to customer demand.

Ordinarily, customers are hesitant about putting their money into B/Es despite their returns being higher than general deposits, because this kind of saving has no government guarantee, while other kinds of deposits are insured. The bank is offering its ACL B/E Convertible to customers looking for higher returns but who remain worried about security.

The B/Es have one-year maturity, but customers who feel insecure about the investment need not wait that long. They can convert their B/Es to fixed-deposit accounts at any time, and the return will still be paid without any penalties.

"Right now, the rates offered to B/E depositors are higher than fixed deposit rates by 0.125-0.25 per cent. The fixed-deposit rates for three to 12 months are now in the range of 3.3-3.75 per cent," Apichart said.

However, customers must have at least Bt500,000 to invest in the bank's B/Es.

The system also works in reverse. The bank's fixed depositors can also convert their fixed accounts to ACL B/E Convertible without penalty, and returns will still be paid.

By offering only convertible B/Es to its customers, ACL Bank aims for investment in them to represent 50 per cent of its outstanding deposits within six to 12 months. At present, B/Es account for 20-30 per cent of its total deposits, savings and current deposits represent 8 per cent, and fixed deposits make up the rest.

The bank's total outstanding deposits are expected to grow from 48 billion to Bt60 billion this year.

The Bank of Thailand would like commercial banks to offer their customers more B/Es, because the Deposit Insurance Agency (DIA) will soon be established, and deposits will no longer be completely protected, Apichart said.

On August 11, the Deposit Protection Act will take effect. In the first year of its implementation, all bank deposits will still be protected by the DIA.

In the second year, guaranteed protection will be available only for deposits not exceeding Bt100 million per person per bank.

In the third year, protection will cover only Bt50 million per person per bank.

In the fourth year, the figure will be Bt10 million.

And from the fifth year onwards, maximum protection will be given to no more than Bt1 million per person per bank.