Devaluation of Thai currency Baht kindled economic crisis in Thailand. To further worsen the matter, the country’s corporate as well as financial sector proved to be inefficient. Before the economic crisis had set in, transactions pertaining to capital accounts and financial markets were considerably liberalized.
Hence, liberalization proved to be fruitful because it enhanced business opportunities. But one drawback was that the financial system in Thailand was incapable of managing funds from foreign incoming deposits. With the intervention of the International Monetary Fund, things have looked up.
The reform program taken up by the IMF, had the following goals:
Make the financial makeup of the country stronger.
Activate the financial companies, which were sick and were non performing.
Raise the existing supervisory as well as regulatory regulations.
Banking sector in Thailand is a vital part of the economy and for its other financial services. Banking sector in Thailand first commenced in the year 1865.
After the Hong Kong and Shanghai Bank was launched in the country, several European banks opened its branches in the country. The banking sector was dominated by the foreign banks. The government as part of the banking sector reform in Thailand launched a protective policy. As per the banking sector reform in Thailand, the government put in all efforts to increase the prominence of the national banks within the country. Due to the reform, the prominence enjoyed by the foreign banks was minimized to a great extent. After the introduction of the protective policy, the role of the foreign bank was restricted to one branch only.
Banking sector reform in Thailand, which was launched in the year 1960 and included many social as well as economic reforms, which helped in the improvement as well as the expansion of the banking sector in the country.
The prevailing banking system in the country comprises special purpose bank, commercial banks, Government Savings Bank. However, the commercial banks are very popular in the country. Foreign banks as well as local banks make up the commercial banking sector of the country.
The banking sector along with the financial sector in the country are categorically distinguished into the following:
Finance And Securities Companies
Credit Foncier Companies
International Banking Facilities or the IBF
Asset Management Companies
Last Updated on : 26th June 2013