Jeffrey Wade
In Thailand, the government has established a Deposit Protection Agency (DPA) to insure bank deposits. The DPA collects money from banks, which are 'taxed' at a rate of 0.4% of deposits. Since 2008, the DPA has provided limited insurance for deposits at Thai private banks, with the coverage limit per depositor per institution reduced over time. As of August 2021, the coverage limit is 1 million Thai Baht per bank, with foreign currencies not covered. This insurance protection applies to most savings accounts, current accounts, and fixed deposit accounts at commercial banks, foreign banks with branches in Thailand, finance companies, and credit foncier firms.
| Characteristics | Values |
|---|---|
| Deposit insurance coverage limit | 1,000,000 Baht per bank |
| Deposit insurance coverage limit start date | 11 August 2021 |
| Currency covered | Thai Baht |
| Agency responsible for deposit insurance | Deposit Protection Agency (DPA) |
| Agency responsible for deposit insurance accumulation | Deposits Protection Agency |
| Accumulated deposit insurance amount as of the beginning of 2012 | 80 billion baht |
| Coverage scope | Thai Baht deposits in accounts that fall under the Deposit Protection Agency (DPA) Act B.E. 2551 (2008) |
| Protection per institution | 1 million limit per depositor per institution |
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What You'll Learn
The Deposit Protection Agency (DPA)
The creation of the DPA was prompted by the Asian economic crisis of 1997, which led to a Deposit Protection Act being passed and implemented in 2008. This Act ensured that bank deposits at Thai banks were fully insured. Over time, the level of protection has decreased. Initially, the coverage limit was 100 million Baht per depositor per financial institution, but this has been reduced over the years, with the limit set at 15 million Baht in 2016. As of August 2021, the DPA lowered the deposit coverage limit to 1 million Baht per depositor per financial institution.
The DPA has been collecting money from banks, with a 'tax' of 0.4% of deposits, accumulating 80 billion Baht by the beginning of 2012. The agency targets retail depositors who may not have sufficient access to financial information and rely on bank deposits for their livelihoods. By insuring deposits, the DPA aims to strengthen the financial system and protect depositors from losses.
As of July 2015, there were 35 financial institutions insured by the DPA, including 30 commercial banks, two finance companies, and three credit foncier companies. Depositors can check the stability of these institutions through their credit ratings and by reviewing their publicly available financial information.
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Maximum deposit insurance of 1 million Thai Baht
The Thai government provides deposit insurance for bank accounts under the Deposit Protection Agency Act. This insurance is provided by the Deposits Protection Agency (DPA), which was established following the Asian economic crisis of 1997.
The DPA collects money from banks, which are 'taxed' at a rate of 0.47% of deposits, with 0.46% used to pay off debt from the 1997 crisis, and 0.01% going towards deposit protection. As of 2012, the DPA had accumulated 80 billion baht.
The maximum deposit insurance provided by the DPA is 1 million Thai Baht per bank. This limit came into effect on 11 August 2021, with the previous limit being 5 million Baht. This reduction in coverage has led to concerns about reduced trust in the banking system, as customers may need to spread their deposits across multiple banks to ensure their money is protected.
It is important to note that this insurance only applies to Thai Baht deposits held in accounts in Thailand, including those held by foreign banks located in the country. Foreign currency accounts and "Non-Resident Baht Accounts" are not covered by the insurance.
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Foreign currencies are not covered
Foreign currencies held in Thai banks are not covered by the Deposit Protection Agency (DPA). The DPA was established to protect customers' deposits in the event of bank insolvency or other issues. While the DPA provides a level of insurance for deposits, it only applies to Thai Baht currency accounts. This means that if you have a foreign currency account in Thailand, your funds are not insured or protected by the Thai government or the DPA in the same way that Thai Baht accounts are.
The exclusion of foreign currency accounts from deposit insurance is a significant consideration for individuals and businesses with financial interests in Thailand. It indicates that these accounts do not benefit from the same level of protection as Thai Baht accounts. This distinction is essential for anyone considering their financial options in Thailand, as it directly impacts the security of their funds.
While the Thai government has taken steps to protect Thai Baht deposits, individuals and entities with foreign currency accounts must understand the risks associated with their choice of currency. It is worth noting that the DPA's coverage limits have changed over time, and there is no guarantee that foreign currency accounts will remain excluded from protection in the future. However, as of the latest updates in 2021, the DPA's focus remains solely on Thai Baht accounts.
The exclusion of foreign currencies from deposit insurance coverage in Thailand highlights the importance of conducting thorough research before making financial decisions in a foreign country. It is crucial to understand the local regulations, protections, and potential risks associated with your chosen financial institution and account type. This knowledge can help individuals and businesses make informed decisions about their money and manage their finances effectively in Thailand.
In summary, foreign currencies held in Thai banks are not currently covered by the Thai government's deposit insurance scheme. This exclusion significantly impacts the level of protection available to individuals and businesses with foreign currency accounts. Understanding the local regulations and staying informed about any changes to deposit insurance coverage are essential steps for anyone managing their finances in Thailand.
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Bank stability and credit ratings
In Thailand, the government has established a Deposits Protection Agency (DPA) to insure bank deposits. Since the Asian economic crisis of 1997, bank deposits in Thai banks have been insured. The Deposit Protection Act was passed in 2008, and since then, there has only been limited government insurance for deposits at Thai private banks.
The original proposal included a blanket guarantee of deposits in the first year, Bt100 million per person per bank in the second year, Bt50 million in the third, Bt20 million in the fourth, and Bt1 million in the fifth year. However, these proposals were amended, and as of August 2016, deposits were protected up to 25 million baht.
Since then, the protection limit has been continuously reduced. On 11 August 2012, the limit was reduced to 50 million baht, and on 11 August 2016, it was further lowered to 15 million baht. Finally, on 11 August 2021, the DPA lowered the deposit coverage limit to 1 million baht. This reduction in bank deposit insurance coverage has led to less trust in the overall banking system.
To provide assurance to investors, the DPA collaborates with Thai commercial banks to publicize information about the deposit protection limit and update depositors about any changes. Depositors can check the stability of financial institutions through their credit ratings, provided by well-known financial organizations. For example, Bangkok Bank's credit rating is classified as "Investment Grade" by international ratings agencies such as Moody's Investors Service and S&P Global Ratings.
In summary, while the Thai government does provide some level of insurance for bank deposits, the coverage limits have decreased over time. Depositors can assess the stability of banks through their credit ratings and other publicly available information, such as gross revenues and assets.
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Deposit Protection Agency Act
The Deposit Protection Agency Act, or DPA, was established in 2008 to protect the deposits of money in financial institutions, enhance confidence and stability in the financial system, and manage and liquidate financial institutions. The Act provides that individual depositors are automatically protected when they open a deposit account with a financial institution. This protection is based on a per depositor, per institution basis, meaning that all of an individual's deposit accounts across all branches of a financial institution will be aggregated into a single amount. Juristic depositors, such as companies, funds, foundations, temples, associations, and cooperatives, are also protected in the same way as individuals. Foreigners with Thai baht deposit accounts at member financial institutions in Thailand are also protected, but "Non-Resident Baht Accounts" as defined in the Exchange Control Act B.E. 2485 (1942) are not.
The DPA collects money from banks, which has been described as a "tax" on the banks. As of the beginning of 2012, the DPA had accumulated 80 billion baht. The DPA has the power to manage its fund, capital, and assets, as well as to collect premiums from financial institutions and make compensation to depositors. The DPA can also issue bills, bonds, or other financial instruments, and invest in government bonds.
To monitor financial institutions' positioning and performance, the Bank of Thailand and other supervisory authorities are empowered to exchange information with the DPA. The DPA also works with Thai commercial banks to publicize information about the deposit protection limit and update depositors on any changes, so they have ample time to make decisions. Depositors can check the stability of financial institutions through their credit ratings, provided by well-known financial organizations, and through their publicly available gross revenues and assets.
The deposit protection limit has changed over time. Initially, there was full-coverage protection of 100 million baht per depositor per financial institution. This was reduced to 50 million baht in 2012 and 15 million baht in 2016. As of August 11, 2021, the limit was lowered to 1 million baht per depositor per financial institution.
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Frequently asked questions
The Thai government insures up to 1,000,000 Baht per bank. This has been in place since 11 August 2021.
The Deposit Protection Agency (DPA) insures deposits in Thai banks.
The Act covers most savings accounts, current accounts, and fixed deposit accounts at commercial banks, foreign banks with branches in Thailand, finance companies, and credit foncier firms.
