BoT suggests forming new entity to replace Development Fund

BANGKOK, 14 June 2010 (NNT) – The Bank of Thailand (BoT) suggests an establishment of a new organization to replace the Financial Institution and Development Fund which is due to end its operation in 2013.

BoT Governor, Tarisa Watanagase said a fresh entity should be established in place of the Financial Institution and Development Fund to provide support for banks after the fund terminates its service. Although at present, Thai financial institutes are set on a strong foundation, the dynamic economic situation can always create new threats to their stability.

The fund should complete all of the pending issues before setting up a new organization. Ms Tarisa said it was necessary to have an entity and a system ready to offer immediate aid to banks in case a problem occurred.

The existing development fund cannot provide assistance for troubled commercial banks. Currently, the process requires an official proposal to the cabinet which takes a long time before a grant can be approved. The long process might result in a damage on the banks.