Unofficial Translation
with the courtesy of The Foreign Banks' Association
This translation is for the convenience of those unfamiliar
with the Thai language.
Please refer to the Thai text for the official version.
--------------------------------------------------------
BANK OF THAILAND
22 September 2004
To Managers
All commercial banks
No. SorNorSor. (21) Wor. 166/2547 Re: Submission of the Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks
To be in line with the policy of improving and developing new
banknote management system as well as to enhance security and flexibility in
practice and to reduce burden of the commercial bank, the Bank of Thailand (BOT)
hereby submits the Notification of the Bank of Thailand Re: Prescription on
Maintenance of Liquid Assets by Commercial Banks dated 16 September 2004 which
was issued by virtue of the provisions of Section 11 ter, Section 11 quarter and
Section 11 quinque of the Commercial Banking Act B.E. 2505 and its further
amendments, and published in the Government Gazette, General Issue, Vol. 121,
Special Part 103 Ngor. dated 20 September 2004. It shall become effective from 8
October 2004 onwards.
The essences of this notification are as follows:
1. Revision of the composition of liquid assets
The commercial banks shall maintain liquid assets for no less
than 6% of total deposits and certain types of borrowings. The revised omponents of liquid assets are as follows:
1.1 deposits with the Bank of Thailand in average amount
shall be no less than 0.8 percent;
1.2 cash at the central cash centers of commercial banks in
average amount shall be no less than 0.2 percent except when the commercial bank
maintains a deposit with the Bank of Thailand under clause 1.1 for any amount in
excess of 0.8 percent, it may maintain cash at the said central cash centers at 0.2 percent less such excess amount, provided that upon consolidating with the amount under clause 1.1, it shall be no less than 1.0 percent;
1.3 cash in hand at commercial banks but when combined
with cash at the central cash centers of commercial banks for the amount in excess of those required under clause 1.2 shall be considered as liquid assets, but not exceeding 2.5 percent;
1.4 the unencumbered securities remains unchanged except for promissory notes issued by Krung Thai Thanakit Finance and Securities Public
Company Limited and negotiable certificates of deposit issued by Krung Thai Bank
Public Company Limited under the note-exchange program of promissory notes of the 56 suspended finance companies, which at present are all redeemed.
The Bank of Thailand has amended the wordings regarding to the
transfer of deposits with the Bank of Thailand in any fortnight period that are in excess of the amount required to be applied in the next following fortnight or the transfer of deposits at the Bank of Thailand of the next following fortnight period to compensate the fortnight in deficit in order to accommodate the new prescriptions of composition of liquid assets while retaining the existing intentions and methodologies. (Examples of the calculation of liquid assets and the transfer of deposits at the Bank of Thailand are shown in attached.)
The cash at the central cash centers of the commercial banks applied as part of the liquid assets under clause 1.2 above shall be counted as liquid assets only upon having registered such central cash centers to the BOT Banknote Management Group.
2. Amendment of the base for calculation of liquid assets
Commercial banks are required to maintain liquid assets to
support borrowings with embedded financial derivatives in order to create fairness in the supervision of such transactions regardless of whether they are in form of deposits or borrowings.
Please be informed and comply accordingly.
Yours Sincerely,
(Mr. Samart Buranawatanachoke)
Senior Director, Financial Institutions Policy Group
Governor For
Enclosed: 1. Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks dated 16 September 2004
2. Example of calculation of liquid assets and transfer of deposits at the Bank of Thailand
Risk Supervision Policy and Analysis Department
Tel: 0-2283-5843, 0-2283-5307
Note [
] The Bank of Thailand will arrange a meeting to clarify on ........ at .........
[x
] No meeting for clarification will be arranged.
Notification of the Bank of Thailand
Re: Prescription on Maintenance of Liquid Assets by Commercial Banks
.............................
1. Rationale
To enhance the prescription on commercial banks in maintaining liquid assets, in particular, their deposits at the Bank of Thailand to be more flexible, practical and compatible with the new banknote management system with minimal impact on the commercial banks, as well as to prescribe liquid assets required for commercial banks to maintain in order to accommodate borrowing transactions with embedded financial derivatives, which the scope has been extended to permit commercial banks to further engage in the said transactions.
2. Statutory Power
By virtue of the provisions of Section 11 ter, Section 11 quarter and Section 11 quinque of the Commercial Banking Act B.E. 2505 as amended by the
Commercial Banking Act (No. 2) B.E. 2522, the Bank of Thailand hereby issues this
regulation, with the approval of the Ministry of Finance.
3. Scope of Application
This Notification is applicable to all commercial banks in accordance with the Commercial Banking Act.
4. Contents
Article 1
The Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks dated 30 July 2003 shall be repealed.
Article 2
Commercial banks with the exception of the Bangkok International Banking Facilities and the Provincial International Banking Facilities shall maintain liquid assets on the average of no less than 6 percent of:
(1) total of all types of deposits;
(2) total foreign borrowings with maturity within one year from the
borrowing date, and those which shall be repayable or may be recalled within one
year from the borrowing date, with the exception of borrowings under the criteria or
conditions prescribed by the Bank of Thailand;
(3) total borrowings with return linked to variables or with embedded
financial derivatives.
In this regard, the total deposits and total borrowings mentioned above shall include the money transferred into Thailand from overseas branches or head offices in the form of inter-office accounts.
Article 3
Such liquid assets to be maintained in accordance with
Article 2 shall consist of:
(1) deposits with the Bank of Thailand in the average amount of no less
than 0.8 percent;
(2) cash at the central cash centers of commercial banks in the average
amount of no less than 0.2 percent except when the commercial bank maintains a
deposit with the Bank of Thailand under clause (1) for any amount in excess of 0.8
percent, the commercial bank may maintain cash at the said central cash centers of
commercial banks 0.2 percent less such excess amount, provided that upon consolidating with the amount under clause (1), it shall be no less than 1.0 percent;
(3) cash in hand at commercial banks but combined with the cash at the
central cash centers of the commercial banks for the amount in excess of those
required by clause (2) shall be considered as liquid assets, but not exceeding 2.5
percent;
(4) the following unencumbered securities:
(a) Thai Government securities,
(b) bonds issued by the Bank of Thailand,
(c) debentures, bonds or promissory notes guaranteed on principals and interest by the Ministry of Finance,
(d) bonds or debt instruments issued by the Financial Institutions
Development Fund,
(e) debentures, bonds or debt instruments guaranteed on principals and interest by the Financial Institutions Development Fund,
(f) debentures, bonds or debt instruments issued by government
agencies or state enterprises approved by the Bank of Thailand or those issued by the Industrial Finance Corporation of Thailand,
(g) securities issued by the Secondary Mortgage Corporation resulting from the conversion of assets to securities project under the Emergency Decree on Specific Purpose Juristic Person for Securitization B.E. 2540.
Article 4
Bangkok International Banking Facilities and Provincial International Banking Facilities shall maintain liquid assets on the average of no less than 6 percent of:
(1) total deposits of non-resident account , which may be withdrawn within one year from the depositing date, with the exception of deposits of non-resident accounts under the criteria or conditions prescribed by the Bank of Thailand;
(2) total foreign borrowings with maturity within one year from the
borrowing date, and those borrowings which shall be repayable or may be recalled
within one year from the borrowing date, with the exception of borrowings under the
criteria and conditions prescribed by the Bank of Thailand.
In this regard, total deposits and total borrowings mentioned above shall
include only the total deposits or the total borrowings of international banking
facilities for domestic lending (OUT-IN) and international banking facilities for
provincial Baht lending. In addition, the money transferred into Thailand from
overseas branches or headquarters in the form of inter-office account shall be
included.
The liquid assets to be maintained in accordance with (1) and (2) shall comply with Article 3.
(3) total deposits of all types excluding the total deposits of international banking facilities for off-shore (OUT-OUT) lending and total deposits of non-resident accounts as mentioned in (1) of this Article. Bangkok International Banking Facilities of foreign branches and Provincial International Banking Facilities may use any asset as liquid asset to be maintained. Whereas, International Banking Facilities of Thai commercial Banks shall maintain the liquid assets in accordance with Article 3.
Article 5
Liquid assets required to be maintained under this notification
shall be calculated on the basis of the fortnightly average of the daily liquid assets in comparison to the fortnightly average of the daily total deposits or the total borrowings of the commercial bank in the previous fortnight as the case may be, taking the 8th day to the 22nd day of the month as one fortnight; and the 23rd day to the 7th day of the next month as the other fortnight; holidays shall be included in such computation.
In case any commercial bank, Bangkok International Banking Facilities
and Provincial International Banking Facilities, having maintained deposits with
the Bank of Thailand on average of less than 0.8 percent or having maintained
deposits with the Bank of Thailand and cash at the central cash centers of the
commercial banks on average of less than 1 percent during any fortnight period,
it is permitted to apply, the deposits with the Bank of Thailand of the previous
fortnight or of the fortnight following the period appropriately maintained in
accordance with this Notification and the maintenance of deposits at the Bank of
Thailand is in excess that of minimum required by Article 3(1), in the
computation of deposits with the Bank of Thailand during the underprovided
fortnight, under the following conditions:
(1) The transfer of the excess amount of deposits at the Bank of
Thailand of previous fortnight to be used for the fortnight in deficit shall not
exceed 5 percent of either of the following a. or b. whichever is lower.
a. the amount of deposits with the Bank of Thailand, which the
commercial bank actually maintained under Article 3(1), of the fortnight from which deposits are transferred or;
b. the amount that is calculated from 1 percent of total deposits and borrowings in accordance with Article 2 of the fortnight from which deposits are transferred.
(2) The transfer of the excess amount of deposits at the Bank of Thailand of following fortnight to be used for the fortnight in deficit shall not exceed 5 percent of minimum deposits with the Bank of Thailand required by Article 3(1) during the fortnight in deficit.
Article 6
The utilized amount shall be deducted from the amount of deposits at the Bank of Thailand for the computation of liquid assets to be maintained during the fortnight from which deposits are transferred. Such transfer shall not cause the liquid assets to be lower than the rate prescribed under this notification.
5. Effective
This notification shall become effective on and from 8 October 2004 onwards.
Given on 16 September 2004
(M.R. Pridiyathorn Devakula)
Governor
Bank of Thailand
-YK-
with the courtesy of The Foreign Banks' Association
This translation is for the convenience of those unfamiliar
with the Thai language.
Please refer to the Thai text for the official version.
--------------------------------------------------------
BANK OF THAILAND
22 September 2004
To Managers
All commercial banks
No. SorNorSor. (21) Wor. 166/2547 Re: Submission of the Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks
To be in line with the policy of improving and developing new
banknote management system as well as to enhance security and flexibility in
practice and to reduce burden of the commercial bank, the Bank of Thailand (BOT)
hereby submits the Notification of the Bank of Thailand Re: Prescription on
Maintenance of Liquid Assets by Commercial Banks dated 16 September 2004 which
was issued by virtue of the provisions of Section 11 ter, Section 11 quarter and
Section 11 quinque of the Commercial Banking Act B.E. 2505 and its further
amendments, and published in the Government Gazette, General Issue, Vol. 121,
Special Part 103 Ngor. dated 20 September 2004. It shall become effective from 8
October 2004 onwards.
The essences of this notification are as follows:
1. Revision of the composition of liquid assets
The commercial banks shall maintain liquid assets for no less
than 6% of total deposits and certain types of borrowings. The revised omponents of liquid assets are as follows:
1.1 deposits with the Bank of Thailand in average amount
shall be no less than 0.8 percent;
1.2 cash at the central cash centers of commercial banks in
average amount shall be no less than 0.2 percent except when the commercial bank
maintains a deposit with the Bank of Thailand under clause 1.1 for any amount in
excess of 0.8 percent, it may maintain cash at the said central cash centers at 0.2 percent less such excess amount, provided that upon consolidating with the amount under clause 1.1, it shall be no less than 1.0 percent;
1.3 cash in hand at commercial banks but when combined
with cash at the central cash centers of commercial banks for the amount in excess of those required under clause 1.2 shall be considered as liquid assets, but not exceeding 2.5 percent;
1.4 the unencumbered securities remains unchanged except for promissory notes issued by Krung Thai Thanakit Finance and Securities Public
Company Limited and negotiable certificates of deposit issued by Krung Thai Bank
Public Company Limited under the note-exchange program of promissory notes of the 56 suspended finance companies, which at present are all redeemed.
The Bank of Thailand has amended the wordings regarding to the
transfer of deposits with the Bank of Thailand in any fortnight period that are in excess of the amount required to be applied in the next following fortnight or the transfer of deposits at the Bank of Thailand of the next following fortnight period to compensate the fortnight in deficit in order to accommodate the new prescriptions of composition of liquid assets while retaining the existing intentions and methodologies. (Examples of the calculation of liquid assets and the transfer of deposits at the Bank of Thailand are shown in attached.)
The cash at the central cash centers of the commercial banks applied as part of the liquid assets under clause 1.2 above shall be counted as liquid assets only upon having registered such central cash centers to the BOT Banknote Management Group.
2. Amendment of the base for calculation of liquid assets
Commercial banks are required to maintain liquid assets to
support borrowings with embedded financial derivatives in order to create fairness in the supervision of such transactions regardless of whether they are in form of deposits or borrowings.
Please be informed and comply accordingly.
Yours Sincerely,
(Mr. Samart Buranawatanachoke)
Senior Director, Financial Institutions Policy Group
Governor For
Enclosed: 1. Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks dated 16 September 2004
2. Example of calculation of liquid assets and transfer of deposits at the Bank of Thailand
Risk Supervision Policy and Analysis Department
Tel: 0-2283-5843, 0-2283-5307
Note [
] The Bank of Thailand will arrange a meeting to clarify on ........ at .........
[x
] No meeting for clarification will be arranged.
Notification of the Bank of Thailand
Re: Prescription on Maintenance of Liquid Assets by Commercial Banks
.............................
1. Rationale
To enhance the prescription on commercial banks in maintaining liquid assets, in particular, their deposits at the Bank of Thailand to be more flexible, practical and compatible with the new banknote management system with minimal impact on the commercial banks, as well as to prescribe liquid assets required for commercial banks to maintain in order to accommodate borrowing transactions with embedded financial derivatives, which the scope has been extended to permit commercial banks to further engage in the said transactions.
2. Statutory Power
By virtue of the provisions of Section 11 ter, Section 11 quarter and Section 11 quinque of the Commercial Banking Act B.E. 2505 as amended by the
Commercial Banking Act (No. 2) B.E. 2522, the Bank of Thailand hereby issues this
regulation, with the approval of the Ministry of Finance.
3. Scope of Application
This Notification is applicable to all commercial banks in accordance with the Commercial Banking Act.
4. Contents
Article 1
The Notification of the Bank of Thailand Re: Prescription on Maintenance of Liquid Assets by Commercial Banks dated 30 July 2003 shall be repealed.
Article 2
Commercial banks with the exception of the Bangkok International Banking Facilities and the Provincial International Banking Facilities shall maintain liquid assets on the average of no less than 6 percent of:
(1) total of all types of deposits;
(2) total foreign borrowings with maturity within one year from the
borrowing date, and those which shall be repayable or may be recalled within one
year from the borrowing date, with the exception of borrowings under the criteria or
conditions prescribed by the Bank of Thailand;
(3) total borrowings with return linked to variables or with embedded
financial derivatives.
In this regard, the total deposits and total borrowings mentioned above shall include the money transferred into Thailand from overseas branches or head offices in the form of inter-office accounts.
Article 3
Such liquid assets to be maintained in accordance with
Article 2 shall consist of:
(1) deposits with the Bank of Thailand in the average amount of no less
than 0.8 percent;
(2) cash at the central cash centers of commercial banks in the average
amount of no less than 0.2 percent except when the commercial bank maintains a
deposit with the Bank of Thailand under clause (1) for any amount in excess of 0.8
percent, the commercial bank may maintain cash at the said central cash centers of
commercial banks 0.2 percent less such excess amount, provided that upon consolidating with the amount under clause (1), it shall be no less than 1.0 percent;
(3) cash in hand at commercial banks but combined with the cash at the
central cash centers of the commercial banks for the amount in excess of those
required by clause (2) shall be considered as liquid assets, but not exceeding 2.5
percent;
(4) the following unencumbered securities:
(a) Thai Government securities,
(b) bonds issued by the Bank of Thailand,
(c) debentures, bonds or promissory notes guaranteed on principals and interest by the Ministry of Finance,
(d) bonds or debt instruments issued by the Financial Institutions
Development Fund,
(e) debentures, bonds or debt instruments guaranteed on principals and interest by the Financial Institutions Development Fund,
(f) debentures, bonds or debt instruments issued by government
agencies or state enterprises approved by the Bank of Thailand or those issued by the Industrial Finance Corporation of Thailand,
(g) securities issued by the Secondary Mortgage Corporation resulting from the conversion of assets to securities project under the Emergency Decree on Specific Purpose Juristic Person for Securitization B.E. 2540.
Article 4
Bangkok International Banking Facilities and Provincial International Banking Facilities shall maintain liquid assets on the average of no less than 6 percent of:
(1) total deposits of non-resident account , which may be withdrawn within one year from the depositing date, with the exception of deposits of non-resident accounts under the criteria or conditions prescribed by the Bank of Thailand;
(2) total foreign borrowings with maturity within one year from the
borrowing date, and those borrowings which shall be repayable or may be recalled
within one year from the borrowing date, with the exception of borrowings under the
criteria and conditions prescribed by the Bank of Thailand.
In this regard, total deposits and total borrowings mentioned above shall
include only the total deposits or the total borrowings of international banking
facilities for domestic lending (OUT-IN) and international banking facilities for
provincial Baht lending. In addition, the money transferred into Thailand from
overseas branches or headquarters in the form of inter-office account shall be
included.
The liquid assets to be maintained in accordance with (1) and (2) shall comply with Article 3.
(3) total deposits of all types excluding the total deposits of international banking facilities for off-shore (OUT-OUT) lending and total deposits of non-resident accounts as mentioned in (1) of this Article. Bangkok International Banking Facilities of foreign branches and Provincial International Banking Facilities may use any asset as liquid asset to be maintained. Whereas, International Banking Facilities of Thai commercial Banks shall maintain the liquid assets in accordance with Article 3.
Article 5
Liquid assets required to be maintained under this notification
shall be calculated on the basis of the fortnightly average of the daily liquid assets in comparison to the fortnightly average of the daily total deposits or the total borrowings of the commercial bank in the previous fortnight as the case may be, taking the 8th day to the 22nd day of the month as one fortnight; and the 23rd day to the 7th day of the next month as the other fortnight; holidays shall be included in such computation.
In case any commercial bank, Bangkok International Banking Facilities
and Provincial International Banking Facilities, having maintained deposits with
the Bank of Thailand on average of less than 0.8 percent or having maintained
deposits with the Bank of Thailand and cash at the central cash centers of the
commercial banks on average of less than 1 percent during any fortnight period,
it is permitted to apply, the deposits with the Bank of Thailand of the previous
fortnight or of the fortnight following the period appropriately maintained in
accordance with this Notification and the maintenance of deposits at the Bank of
Thailand is in excess that of minimum required by Article 3(1), in the
computation of deposits with the Bank of Thailand during the underprovided
fortnight, under the following conditions:
(1) The transfer of the excess amount of deposits at the Bank of
Thailand of previous fortnight to be used for the fortnight in deficit shall not
exceed 5 percent of either of the following a. or b. whichever is lower.
a. the amount of deposits with the Bank of Thailand, which the
commercial bank actually maintained under Article 3(1), of the fortnight from which deposits are transferred or;
b. the amount that is calculated from 1 percent of total deposits and borrowings in accordance with Article 2 of the fortnight from which deposits are transferred.
(2) The transfer of the excess amount of deposits at the Bank of Thailand of following fortnight to be used for the fortnight in deficit shall not exceed 5 percent of minimum deposits with the Bank of Thailand required by Article 3(1) during the fortnight in deficit.
Article 6
The utilized amount shall be deducted from the amount of deposits at the Bank of Thailand for the computation of liquid assets to be maintained during the fortnight from which deposits are transferred. Such transfer shall not cause the liquid assets to be lower than the rate prescribed under this notification.
5. Effective
This notification shall become effective on and from 8 October 2004 onwards.
Given on 16 September 2004
(M.R. Pridiyathorn Devakula)
Governor
Bank of Thailand
-YK-