Good Corporate Governance: The Bank of Thailand issued a notification in
July 2004 that determined the fit and proper criteria for directors and senior
management of financial institutions. This guideline was the same one used to vet the
qualifications of directors and senior management within the applications for change
of status submitted by financial institutions under the FSMP.
B. Resolve tax impediments to financial sector development. Mergers and
transfers of assets that occurred under the FSMP have been exempted from tax
liabilities, and authorities have also removed tax benefits for out-in transactions of
International Banking Facilities (IBFs).
C. Improve basic infrastructure of the financial sector through development of
credit bureau10 and related laws, such as the Deposit Protection Act11 and Financial
Institutions Businesses Act.12
D. Remove regulations that impede financial sector efficiency. The Bank of
Thailand has relaxed the rule requiring commercial banks wishing to open branches in
well-serviced area to concomitantly open a branch in the rural areas. Furthermore,
commercial banks operating the last commercial bank branch in a local community
will be allowed to close that branch if they have a plan to offer substitutable financial
services to that community.13
The Bank of Thailand has further relaxed social responsibility rule that require
a Thai provincial commercial bank branch to provide credit or do business no less
than a certain percentage of their deposit in the operating region and country
respectively.14 A similar amendment for foreign banks is also being deliberated.
E. Enhance market mechanism, through the establishment of clear exitprocedures.
The Bank of Thailand is currently researching the supervisory regime of
other countries to establish trigger points that will initiate orderly exit procedures for
troubled financial institutions. Commercial banks will be invited to participate in the
process of developing the trigger points so as to ensure agreeable and transparent exit
procedures.