All banks to pay 0.47% of deposits

All banks, commercial and state-run, will be required to pay 0.47 per cent of their deposit base, in the government-initiated move to reduce the public burden on Financial Institutions Development Fund's Bt1.14 trillion debt.

Deputy Prime Minister and Finance Minister Kittiratt Na-Ranong said after the meeting with Bank of Thailand governor and Thai Bankers Association’s representatives that while 0.46 per cent would be used in repaying the FIDF interest, the remaining 0.1 per cent would go to the Deposit Protection Agency (DPA).

Currently, commercial banks are contributing 0.4 per cent of their deposits to the DPA, established in 2008 to insure public deposits.

"I don’t mind how long the FIDF debt would be repaid, with this surcharge rate. I do believe that the contribution would cover the interest burden in the first year and some would be left to repay the principal. This would help reduce the debt burden," Kittiratt told reporters.

Earlier, only commercial banks were expected to pay the higher surcharges. This raised criticisms over the level-playing field, as state-run banks are not obliged to pay any surcharge.

Kittiratt said that the surcharge would also be imposed on state-run banks, to neutralise the discrepancy.

He also assigned Bank of Thailand Governor Prasarn Trairatvorakul to seek ways to increase the maximum deposit guarantee. The guarantee of Bt1 million per account per bank, to be effective this August, is too small, he said.