The adjustment of the deposit protection limit by the Deposit Protection Agency, which will revert to 1 million baht per depositor per financial institution starting from August 11, 2021, has been widely discussed on social media. Some may not fully understand the implications of this reduction in deposit protection.

           Finance Minister Arkhom Termpittayapaisith stated that this criterion is set forth in Section 53 of the Deposit Protection Agency Act B.E. 2551 and its amendments. The establishment of the deposit protection limit in Thailand follows the key principles of an effective deposit protection system, which is a global standard, covering small depositors who make up the majority of depositors in the country and promoting financial discipline within the entire financial system. This will raise awareness among depositors regarding risk management and compel financial institutions to manage their operations efficiently.

           The Bank of Thailand and the Ministry of Finance confirmed that financial institutions in Thailand remain strong and stable, with a capital adequacy ratio (BIS ratio) at 20%, which is higher than many countries in the region. Additionally, liquidity remains high, allowing them to withstand the current economic volatility caused by the COVID-19 pandemic. Therefore, there is no need to extend the previous deposit protection limit. Furthermore, relevant agencies have continuously communicated to ensure that the public understands and has confidence in the effective deposit protection system.

Today, Terrabkk has provided accurate and clear information from the Deposit Protection Agency to clarify any doubts.

 

 

Question: What is deposit protection?

Answer: Deposit protection is a government policy designed to assure depositors that their funds are safe when deposited with financial institutions under protection. It aims to safeguard small depositors, who constitute the majority of depositors at each financial institution. If a protected financial institution has its license revoked, depositors will be protected within the limits and timeframes specified by law.

            The Deposit Protection Agency was established on August 11, 2008, with a protection limit set at 1 million baht. To help depositors understand and adapt to the limited deposit protection system, the protection limit will be gradually adjusted (from full coverage of 50, 25, 15, 10, 5, and 1 million baht in sequence). On August 11, 2021, the deposit protection limit will officially be set at 1 million baht as stipulated by law.

 

Question: What are the implications of the 1 million baht protection limit?

Answer: All depositors will be protected under the 1 million baht limit. Depositors with balances not exceeding 1 million baht will receive full coverage. Currently, 98.03% of all depositors have deposits not exceeding 1 million baht.

            For depositors with amounts exceeding the protection limit in a financial institution that has had its license revoked, protection will be limited to 1 million baht, while any excess will be subject to the liquidation process of the Deposit Protection Agency. The distribution of assets from the liquidation will depend on the value of the managed assets and the duration of the process.

 

Question: Who is protected?

Answer: Both individual and corporate depositors are protected. The protection for each depositor (across all accounts) at one financial institution is calculated based on the principal and interest across all accounts and branches, minus any overdue debts (only for the revoked financial institution) within the 1 million baht limit.

 

Question: What types of deposits are protected?

Answer: Deposits in Thai baht and domestic deposit accounts, including: 1. Current accounts 2. Savings accounts 3. Fixed deposits 4. Deposit certificates 5. Deposit receipts.

 

Question: Which financial institutions offer protection?

Answer: Currently, the financial institutions under protection include 19 Thai commercial banks, 11 branches of foreign banks, 2 finance companies, and 3 credit foncier companies, totaling 35 institutions (as of July 30, 2021).

You can check the list of protected financial institutions at: https://www.dpa.or.th/articles/view/list-of-insured-financial-institutions

 

Question: What is the current state of financial institutions?

Answer: Currently, financial institutions under the supervision of the Bank of Thailand are strong, with high capital and liquidity levels, so there is no need for concern.

 

           In summary, in Thailand today, over 98.03% of depositors, amounting to 82 million individuals, have deposits not exceeding 1 million baht. If a protected financial institution has its license revoked, this group of customers will receive full deposit protection.

            Meanwhile, depositors with amounts exceeding 1 million baht will be protected up to the limit of 1 million baht. Any amount exceeding the protection limit is still entitled to a refund, but must wait for the liquidation process to be completed before receiving payment according to the legal order of creditor repayment.

            The deposit protection will cover both individuals and corporations for each depositor (across all accounts) at one financial institution. For example, if Mr. A has three accounts with Bank A, he will be counted as one depositor, or if Mr. B has accounts with five banks, he will be counted as five depositors, etc.

This deposit protection covers deposits in Thai baht and domestic deposit accounts, including current accounts, savings accounts, fixed deposits, deposit certificates, and deposit receipts.

If you have further questions, please contact the Deposit Protection Agency hotline at 1158.