By
Bhushan Akolkar
March 20th, 2024
The Bank of Thailand plans to put the virtual banks under a “restricted phase” for a few years after beginning operation.
For the first time ever, Thailand will be allowing the operation of virtual banks in the country. The nation’s central bank, the Bank of Thailand, revealed plans to roll out virtual banks as the government tries to boost competition and more. Also, the Southeast Asian country wants to reduce expenses for businesses and individuals and expand loan access. The effort is widely targeted at bolstering the nation’s economy.
Bank of Thailand to Allow Virtual Banks
In a “Consultation Paper on Virtual Bank Licensing Framework,” the Bank of Thailand revealed that the application to allow virtual banks to provide financial services would be available later in 2023. While the application is not yet open till 2023 Q1, there are already 10 parties interested in applying for the permits. It has been noted that all qualified applicants must meet specific requirements. Meanwhile, the central bank said it will issue three licenses in 2024, while operation will fully begin in 2025.
Under the licensing framework, the traditional commercial banks and virtual banks in Thailand will operate with the same regulations and supervision. The central bank wrote:
“Virtual banks should not initiate a race to the bottom through irresponsible lending, give preferential treatment to related parties, nor abuse dominant market position which will pose risks to financial stability, depositors, and consumers as a whole.”
In addition, the Bank of Thailand plans to put the virtual banks under a “restricted phase” for a few years after beginning operation. During this phase, there would be proper monitoring to prevent systemic financial risks. This comes as the country’s Securities and Exchange Commission recently announced its intention on stricter crypto rules to heighten investors’ protection. Many authorities worldwide are reviewing and tightening crypto laws in their jurisdictions following FTX’s demise. Apart from the FX crash, the Thai SEC representatives referred to the failures of the Celsius Network, Zipmex, Three Arrows Capital, and TerraUSD.
Thailand regulators are concerned with the increasing crypto advertising, which could expose the audience to investment risks. These challenges made the authorities tag the digital asset industry as “vulnerable” and required oversight.
Thai Government’s Continuous Effort to Bolster Economy
Recently, Thailand and Hungary partnered on a technology corporation deal. The Thai government sought support for adopting blockchain technology as residents keep demanding crypto, mobile payment, e-commerce, and co. In addition to its move to pilot its central bank digital currency, Thailand recorded many crypto-related developments in 2023.
On the latest effort on virtual banks, the Bank of Thailand’s Assistant Governor, Tharith Panpiemras, stated that “higher competition will strengthen the overall banking system by promoting existing players to improve their services and innovations. New virtual banks will also expand their services into new underserved customers with lower costs that would benefit the overall customers.”