BANK OF THAILAND July 13, 1998To: Managers No. Ngor. (Wor) 1514/2541 Re: Procedural Guidelines Respecting Interest Payment The Bank would like to deliver herewith the Notification of the Bank of Thailand Re: Prescription on Interests and Discounts for Observing by Commercial Banks (No.5) dated July 10, 1998 which was published in the Government Gazette and will come into effect as from July 14, 1998. The essential particulars in this Notification which are in addition to those in the previous Notification are as follows: 1. Saving Deposit Ceiling rate of interests which commercial banks may pay for savings deposits is prescribed at not exceeding the reference rate of interests on savings deposits as announce by the Bank plus 2% margin. The commercial banks shall apply an equal maximum interest rate at their head office and all branches. During the first week of July 14-19, 1998, such reference rate will be equivalent to 5%. The Bank will announce such reference rate for subsequent weeks on every Friday through its Internet address, www.bot.or.th/fsupv/public/interest/menu.htm, as well as by document which can be obtained at the public relations counter, Head Office Building, Ground Floor. 2. Time Deposit 2.1 Reference rate of interests still follow the old basis, i.e. and average rate of 5 major banks + 3% for every duration. 2.2 The maximum interest rates quoted by the head office and all branches in Thailand must be equal, provided that the branches are at the liberty to fix different amounts of deposits. 2.3 The commercial banks must announce maximum rate of interests payable for each duration, and may not pay interests in excess of the announced rate. 2.4 The commercial banks shall be flexible to pay interest to certain customers in excess of the maximum rate prescribed under 2.3 by not more than 0.5% provided that the commercial banks must specify conditions for such flexibility in the announcement of interest rate too and that the interest rate inclusive of such flexible rate shall not exceed the reference rate of interests announced by the Bank + 3%. 2.5 Deposits Due on Holiday In case of time deposits in respect of which the maturity date falls on a holiday of commercial banks, and the customers do not wish to renew the duration and request for withdrawal together with interests on the next working day, the commercial banks shall also compute interest on such holiday for the customers. 2.6 Duration of Deposit In case the commercial banks borrow money from financial institutions by issuing B/E with duration less than 3 months, or accept money on deposit with the duration not in accordance with the duration of deposits under the announcement of reference rate of interest, the commercial banks shall prescribe interest rate by referring to the duration of deposits as follows: - B/E with duration not exceeding 3 months, reference shall be made to the 3-month deposits - B/E or deposits with duration exceeding 3 months but not beyond 6 months, reference shall be made to the 6 month deposits. - B/E or deposits with duration exceeding 6 months, reference shall be made to the 12-month deposits. Please note that at present the Bank does not permit commercial banks to issue B/E in order to mobilize fund from the public. Please be advised and observe accordingly. Yours sincerely, - signature - (Mrs.Tarisa Wattanakes) Director, Department 9 Department of Financial Institution Supervision, acting for the GovernorEnclosuer: Notification of the Bank of Thailand Re: Prescription of Interests and Discounts for Observing by Commercial Banks (No.5) dated July 10, 1998.Department of Financial Institution Supervision Tel. 283-5939 BANK OF THAILAND Notification of the Bank of Thailand Re: Prescription of Interests and Discounts for Observing By Commercial Banks (No.5) ______________________________ By virtue of Section 14 of the Commercial Banking Act B.E. 2505 amended by the Commercial Banking Act (No.2X B.E. 2522, the Bank of Thailand, with approval of the Minister of Finance, issues prescriptions as follows: Clause 1. The provisions in Clause 2. Of the Notification of the Bank of Thailand Re: Prescription of Interests and Discounts for Observing by Commercial Banks dated October 20, 1993 amended by the Notification of the Bank of Thailand Re: Prescription of Interests and Discounts for Observing by Commercial Bank (No.4) dated September 18, 1997 shall be repealed and replaced by the following: “Clause 2. In respect of interests on deposits, the commercial banks shall comply with the following: (1) For deposits repayable upon demand including deposits repayable upon expiration of a duration which is less than 3 months, no interest shall be paid. (2) For deposits repayable upon demand in the type of savings which are not withdrawn by cheque, interests shall be paid at the rate quoted by the commercial banks provided that such rate shall not exceed the average rate of interests paid by the major banks for deposits of the same type as announced by the Bank of Thailand plus the rate of 2 per cent per annum. (3) For deposits repayable upon expiration of a duration of 3 months or more, interests shall be paid at the rate quoted by the commercial banks provided that such rate shall not exceed the average rate of interests paid by the major banks for deposits of the same duration as announced by the Bank of Thailand plus the rate of 3 per cent per annum. (4) For deposits repayable upon expiration of their duration in the type of contractual savings, with the monthly duration of deposit not less than 24 months consecutively, interests shall be paid at the rate quoted by the commercial banks. The Commercial banks shall announce the interest rates and conditions of Payment for each type of deposit to both general and major customers, including interest rate and conditions of payment for deposits under Clause 2(3) which the commercial banks agree to permit early withdrawal, which announcement of interest rate shall apply to their head offices and all branches. The major banks under this clause mean Bangkok bank public company limited, Thai Farmers bank public company limited, Siam commercial bank public company limited, Krung Thai bank public company limited and Bank of Ayudhya public company limited.” Clause 2. This Notification shall come into force and effect from the day of its Publication in the Government Gazette. Notified on this 10 th day of July, 1998. - signature - (M.R.Jatumongkol Sonakul) Governor Bank of Thailand-YK-