28 December B.E.2544(2001)To Manager Authorised Banks* Finance Companies and Finance and Securities Companies The Export and Import Bank of Thailand The Industrial Finance Corporation of Thailand No.BOT.FOG. (14) C.2875 / 2544 Subject : Lending of Thai Baht (Direct Loan) to Non-Residents (Measures to Prevent Thai Baht Speculation) The Bank of Thailand issued circulars regarding measures to prevent Thai Baht speculation in 1998 (B.E.2541) as stated in the circulation No.BOT.BF(C) 190/2541 dated 29 January 1998 (B.E.2541) and the circulation No.BOT.FOG.(14) C.2107/2544 and 2108/2544 dated 24 September 2001 (B.E.2544). Signifacance of the measures is as follows: (1) financial institutions may not extend the Baht loan to the Non-Resident (NR) except the NRs who are natural persons and were granted work permit to work in Thailand for not less than one year and need the loan for personal spending within the country. However, this loan must be guaranteed and may not exceed 5 million baht. (2) in lending to NR as to provide them with Thai baht liquidity, financial institutions may not loan more than 50 million baht to the NRs with no underlying transactions. In the present, international economic situation has improved. For the benefit of trade and economic base expansion of Thailand, the Bank of Thailand shall allow Thai baht to be used for conducting transactions with neighbour countries which are Burma, Laos, Cambodia, Vietnam and the Southern part of China. The Bank of Thailand considers relaxing the measures to prevent Thai Baht speculation by allowing financial institutions to extend Thai baht direct loan to the NRs residing in those countries under following conditions: 1. Financial institutions that wish to extend Thai baht direct loan to the NRs residing in stated countries are required to seek prior approval from the Financial Markets and Reserve Mangement Department, Financial Markets Operations Group, Bank of Thailand. The Bank of Thailand shall consider and grant permission to financial institutions to lend Thai Baht the NR on the case-by-case basis. 2. Whe financial institutions are approved to lend Thai baht to the NRs with reference to No. 1, fund borrowed shall be deposited into the Special Nonresident Account (SNA) which is opened at the lending financial institution. In accordance with this circulation, the NR shall not be allowed to possess more than one SNA account. 3. Depositing institutions are required to inform name of account holder and SNA account number to the Bank of Thailand after account was opened. In each time, if detail of account is changed, depositing insttutions must report new information to the Bank of Thailand. 4. Depositing institutions are required to monitor the withdrawal of Thai baht in the SNA account comply with the objectives set by the Bank of Thailand. The objectives include purchase of goods and services in Thailand or settle the obligations with residents with an exception on No. 6. 5. The Bank of Thailand shall not a allow fund transfer between SNA account and other Nonresident Baht Accounts or between SNA accounts. 6. The Bank of Thailand shall not allow the NR to convert Thai baht into foreign currencies in SNA account except in the case that the NR has borrowed Thai baht for purchase foreign currencies and has initially informed rationale and necessity in the loan application. 7. Depositing institutions are requied to submit copy of SNA statement and other evidences that indicatign the use of baht for purchasing goods and services in Thailand or settling obligations with residents (with reference to No. 4) or evidences of purchase of foreign currency (with eference to No.6) to the Financial Markets and Reserve Management Department, Financial Markets Operations Group, Bank of Thailand on the monthly basis. Evidences shall be submitted on the First business day of next month and financial institutions are required to keep evidences of the use of baht to be examined by the Bank of Thailand for at least three years. 8. All evidences are required to be certified true copy by the NR and depositing institutions. 9. Financial institutions are required to report those transactions in Table 22 Report of Outstanding Balance of THB lending Transactions with-Resident (With Underlying) in accordance with the Circulation NO.BF(C) 29/2542 Revision of Reporting System and Submission of Report dated 30 August 1999 (B.E.2542). The Circulation will be effective since 27 December 2001 (B.E.2544) Please be informed and strictly comply with the circulation Sincerely yours, (Mr.Pakorn Malakul Na Ayudya) Deputy Governor Monetary Stability Exchange Control Division Financial Markets and Reserve Mangement Department Financial Markets Operations Group Tel: 0-2283-5326-7 Remark : (/) No meeting organsied.-ยก-