Deposit Protection Agency Act Takes Effect Today

[george]

DPA today's the day for the new act

BANGKOK: -- The Deposit Protection Agency Act takes effect today. The Nation's Anoma Srisukkasem has gathered the most frequently asked questions about the new law, which could affect the deposits of all savers.

What is the Deposit Protection Agency?

The Deposit Protection Agency (DPA) is a staterun organisation established to guarantee the deposits of savers in financial institutions.

It replaces the Bank of Thailand's Financial Institutions Development Fund, which has given a blanket guarantee on all deposits in all financial institutions since the 1997 financial crisis.

The establishment of the DPA takes the burden of deposit guarantees off the FIDF which will be liquidated over the next five years.

However the guarantee by the DPA will gradually fall from a blanket guarantee to a maximum guarantee of Bt1 million per person per bank.

What is the key principle of the deposit protection system?

DPA gives protection on the deposits of retail savers who are major depositors in the banking system, so they will not be affected by the closure of any financial institution.

In addition, it wants to encourage financial discipline among savers and strengthen financial stability in the banking system.

Savers need to put money in the banks or other financial channels based on financial literacy, while the financial institutions must strengthen their balance sheets to assure customers of their strong financial background.

Who is under the deposit protection?

Both Thai and foreign depositors who have deposit accounts in a financial institution registered in Thailand.

Deposit accounts include current, savings and fixed accounts, but not nonresident baht accounts.

Which deposits in financial institutions are under the protection system?

Deposits in 41 financial institutions are under deposit protection. They are 17 Thai commercial banks, 17 foreign full branches and representatives and seven financial companies and credit foncier comฌpanies.

Deposits in special financial institutions, such as the Government Housing Bank and the Bank for Agriculture and Agricultral Cooperatives are not under protection.

The Government Pension Fund, Provident Fund, Social Security, foundations, longterm funds and retirement mutual funds, which put money in deposit accounts, will get the guarantee under the same conditions as other depositors. However, the authorities would have to indicate in detail how much of their members' money would be covered by the DPA act.

The authorities may have to introduce new regulations later in order to cover deposits in the speฌcial stateowned financial instituฌtions under the DPA act.

How do depositors obtain deposit protecฌtion?

When any financial institution is shut down, the depositors will receive their deposits back to a cerฌtain amount. In the first year, between August 11, 2008, and August 10, 2009, the depositors receive a blanket guarantee.

In the second year, between August 11, 2009, and August 10, 2010, the depositors get a Bt100million guarantee each of comฌbined accounts in a financial instiฌtution. In the third year, between August 11, 2010, and August 10, 2011, depositors get a Bt50million guarantee each of combined accounts in a financial institution.

In the fourth year, between August 11, 2011, and August 10, 2012, depositors get a Bt10million guarantee each of combined accounts in a financial institution. After that, from August 11, 2012, the depositors have a Bt1million guarantee each of combined accounts in a financial institution.

For example, Wichit has deposits of Bt1,200,000 in Chicken Bank, with Bt500,000 in the Nakhon Nowhere branch and Bt700,000 in the Buriburi branch. He has deposits of Bt750,000 in Egg Bank - Bt650,000 in the Bangkrapi branch and Bt100,000 in the Prattaya branch.

As of December 31, 2008, Wichit will get the full amount of Bt1,200,000 if the Chicken Bank is closed. He will receive all his money, Bt750,000, if the Egg Bank is shut down.

As of November 15, 2010, Wichit will obtain only Bt1,000,000 from DPA and the rest from the liquidation process. He will get all his Bt750,000 from DPA if the Egg Bank is closed.

What should depositors do when their financial institutions are closed?

They are required to state their intention to reclaim the money from the DPA, which will announce time, place and other details.

Within 40 days after the finanฌcial institutions are closed, the DPA will inform the depositors of the closed financial institutions and ask them to state their intention. The depositors will get the money back within 30 days of the intenฌtion date.

What should depositors do if they do not state their intention?

The depositors are allowed to ask for the money from the closed financial institutions in accordance with the liquidation process.

How will the depositors of jointname deposit accounts get protection?

They will get the money back in the proportion of the deposits they made. If they do not know the exact proportion, they will get the money equally. The money will be included with the money in any private account of each depositor.

For example, Wichit and Siriporn have a jointname deposit account worth Bt1,000,000 in a bank. Wichit has his own account worth Bt800,000 and Siriporn has her private account worth Bt400,000 in that bank.

If the bank is closed in December this year, Wichit will receive his full money of Bt1,300,000 and Siriporn will get the full amount of Bt900,000.

If the bank is shut down in October, 2012, Wichit will receive Bt1,000,000 from the DPA and the rest from the liquidation process, and Siriporn will get Bt900,000 from the DPA.

-- The Nation 2008-08-11

[glyph]

Too, almost 99% of accounts have deposits of less than 1,000,000 THB

[Ned]

"Deposit accounts..........but NOT non resident baht accounts." Are foreigners staying here on Non O visas eg retirement, classified as residents, temporary residents or simply non residents and thus not covered by the Deposit Protection Agency Act?!

[dr_Pat_Pong]

"Deposit accounts..........but NOT non resident baht accounts." Are foreigners staying here on Non O visas eg retirement, classified as residents, temporary residents or simply non residents and thus not covered by the Deposit Protection Agency Act?!

Hard to say ... and it would be an arguable topic in a Thai Court.

[SirPaul]

DPA today's the day for the new act

BANGKOK: -- The Deposit Protection Agency Act takes effect today. The Nation's Anoma Srisukkasem has gathered the most frequently asked questions about the new law, which could affect the deposits of all savers.

What is the Deposit Protection Agency?

The Deposit Protection Agency (DPA) is a staterun organisation established to guarantee the deposits of savers in financial institutions.

It replaces the Bank of Thailand's Financial Institutions Development Fund, which has given a blanket guarantee on all deposits in all financial institutions since the 1997 financial crisis.

The establishment of the DPA takes the burden of deposit guarantees off the FIDF which will be liquidated over the next five years.

However the guarantee by the DPA will gradually fall from a blanket guarantee to a maximum guarantee of Bt1 million per person per bank.

What is the key principle of the deposit protection system?

DPA gives protection on the deposits of retail savers who are major depositors in the banking system, so they will not be affected by the closure of any financial institution.

In addition, it wants to encourage financial discipline among savers and strengthen financial stability in the banking system.

Savers need to put money in the banks or other financial channels based on financial literacy, while the financial institutions must strengthen their balance sheets to assure customers of their strong financial background.

Who is under the deposit protection?

Both Thai and foreign depositors who have deposit accounts in a financial institution registered in Thailand.

Deposit accounts include current, savings and fixed accounts, but not nonresident baht accounts.

Which deposits in financial institutions are under the protection system?

Deposits in 41 financial institutions are under deposit protection. They are 17 Thai commercial banks, 17 foreign full branches and representatives and seven financial companies and credit foncier comฌpanies.

Deposits in special financial institutions, such as the Government Housing Bank and the Bank for Agriculture and Agricultral Cooperatives are not under protection.

The Government Pension Fund, Provident Fund, Social Security, foundations, longterm funds and retirement mutual funds, which put money in deposit accounts, will get the guarantee under the same conditions as other depositors. However, the authorities would have to indicate in detail how much of their members' money would be covered by the DPA act.

The authorities may have to introduce new regulations later in order to cover deposits in the speฌcial stateowned financial instituฌtions under the DPA act.

How do depositors obtain deposit protecฌtion?

When any financial institution is shut down, the depositors will receive their deposits back to a cerฌtain amount. In the first year, between August 11, 2008, and August 10, 2009, the depositors receive a blanket guarantee.

In the second year, between August 11, 2009, and August 10, 2010, the depositors get a Bt100million guarantee each of comฌbined accounts in a financial instiฌtution. In the third year, between August 11, 2010, and August 10, 2011, depositors get a Bt50million guarantee each of combined accounts in a financial institution.

In the fourth year, between August 11, 2011, and August 10, 2012, depositors get a Bt10million guarantee each of combined accounts in a financial institution. After that, from August 11, 2012, the depositors have a Bt1million guarantee each of combined accounts in a financial institution.

For example, Wichit has deposits of Bt1,200,000 in Chicken Bank, with Bt500,000 in the Nakhon Nowhere branch and Bt700,000 in the Buriburi branch. He has deposits of Bt750,000 in Egg Bank - Bt650,000 in the Bangkrapi branch and Bt100,000 in the Prattaya branch.

As of December 31, 2008, Wichit will get the full amount of Bt1,200,000 if the Chicken Bank is closed. He will receive all his money, Bt750,000, if the Egg Bank is shut down.

As of November 15, 2010, Wichit will obtain only Bt1,000,000 from DPA and the rest from the liquidation process. He will get all his Bt750,000 from DPA if the Egg Bank is closed.

What should depositors do when their financial institutions are closed?

They are required to state their intention to reclaim the money from the DPA, which will announce time, place and other details.

Within 40 days after the finanฌcial institutions are closed, the DPA will inform the depositors of the closed financial institutions and ask them to state their intention. The depositors will get the money back within 30 days of the intenฌtion date.

What should depositors do if they do not state their intention?

The depositors are allowed to ask for the money from the closed financial institutions in accordance with the liquidation process.

How will the depositors of jointname deposit accounts get protection?

They will get the money back in the proportion of the deposits they made. If they do not know the exact proportion, they will get the money equally. The money will be included with the money in any private account of each depositor.

For example, Wichit and Siriporn have a jointname deposit account worth Bt1,000,000 in a bank. Wichit has his own account worth Bt800,000 and Siriporn has her private account worth Bt400,000 in that bank.

If the bank is closed in December this year, Wichit will receive his full money of Bt1,300,000 and Siriporn will get the full amount of Bt900,000.

If the bank is shut down in October, 2012, Wichit will receive Bt1,000,000 from the DPA and the rest from the liquidation process, and Siriporn will get Bt900,000 from the DPA.

-- The Nation 2008-08-11

This is good news because if savers deposits are gauranteed then it remains unlikely that the bank wil be in trouble due to customers all trying to get there money out at one time, e.g. Northern Rock.

Stability at this time is most important.

[samuibeachcomber]

"Deposit accounts..........but NOT non resident baht accounts." Are foreigners staying here on Non O visas eg retirement, classified as residents, temporary residents or simply non residents and thus not covered by the Deposit Protection Agency Act?!

Hard to say ... and it would be an arguable topic in a Thai Court.

clarification would be good,but on the face of it it sounds like this does not include farangs living here,cos are n't we non resident?ie,not on a permanent basis.How to get clarification?

[Naam]

"Deposit accounts..........but NOT non resident baht accounts." Are foreigners staying here on Non O visas eg retirement, classified as residents, temporary residents or simply non residents and thus not covered by the Deposit Protection Agency Act?!

Who is under the deposit protection?

Both Thai and foreign depositors who have deposit accounts in a financial institution registered in Thailand.

[how241]

Any updates to this ? Thanks

[Pib]

Savings, Current, & Fixed accounts are different from Non-resident baht accounts. As the article stated foreign depositors are also covered for savings, current, and fixed accounts, but not non-resident baht accounts which I doubt many expats have.

See this Bangkok Bank web page link for an explanation of Savings, Current, Fixed, and Non-Resident accounts. Unless you are an investor in Thailand and periodically repatriating investment funds, I don't expect the average expat has a Non-Resident accout. The term "Non-resident" for banking accounts does not mean the same as it does for visas/extensions of stay...don't try to make them have the same meaning in this case.

Edited July 26, 2011 by Pib

[John 1]

after the covered amount's gets reduced to 1Mil, what are the ways and cost to cover large amount's is there some form of insurance or would the cost be unreasonable. Up to now I've been comfortable leaving money in any bank but after Aug2012 will have to look.

[KKvampire]

They need a deposit protection scheme in thailand for when a tenant leaves a deposit with a landlord and when the tenant contract ends the landlord has excuses for not giving all or none of the deposit back, I've been stung by scum landlord before when in Bangkok and a Thai friend says its common and Thais are often treated the same. any paper you sign (if you sign) in a tenancy agreement is worthless because there's no legal place to go for any redress.

Edited July 27, 2011 by KKvampire

[chiang mai]

The scheme covers both foreigners and local residents but the issue of a foreigner having a non-resident account remains. In my experience any foreigner holding an OA visa will almost certainly have a resident account, unless they specifically asked for a non-resident account or are a customer of HSBC where non-resident accounts used to be the norm. If in doubt, ask your bank - a quick way to check is to understand if you can deposit THB into your account (without suppying reams of paperwork), if you can then it's a resident account.

[Pib]

after the covered amount's gets reduced to 1Mil, what are the ways and cost to cover large amount's is there some form of insurance or would the cost be unreasonable. Up to now I've been comfortable leaving money in any bank but after Aug2012 will have to look.

You could just spread your wealth among Thai banks. Per the article there are a bunch different financial institutions/banks covered. You will be covered up to 1M baht per financial institution/different bank. Like having 1M in a Bangkok Bank account, 1M in a K-Bank account, 1M in a SCB account, etc. Just be sure they are different banks and not just different branches of the same bank.

But personally, I wouldn't keep over 1M in Thailand...I prefer keeping the bulk of my savings in my home country.

Edited July 27, 2011 by Pib

[chiang mai]

But personally, I wouldn't keep over 1M in Thailand...I prefer keeping the bulk of my savings in my home country.

Want to to share your logic on this point?

[Pib]

But personally, I wouldn't keep over 1M in Thailand...I prefer keeping the bulk of my savings in my home country.

Want to to share your logic on this point?

I don't do investments in Thailand...when investing in mutual funds/stocks/etc in my home country (the U.S.), it makes moving money around/in/out/between checking, savings, and investments easy to do/piece of cake. Trying to send significant sums of money out of Thailand is generally a herculean effort. Plus, the FDIC in the U.S. covers up to $250,000 or approx 7.5M in baht) per depositor, per insured bank, per account ownership category, which makes it easy to have a "lot more" than $250K (7.5M Baht) covered/insured by having your money in several accounts in several banks.

[geriatrickid]

But personally, I wouldn't keep over 1M in Thailand...I prefer keeping the bulk of my savings in my home country.

Want to to share your logic on this point?

A Swedish, Canadian or Australian would be an idiot to move assets out of one of these nation's banks as they are some of the safest in the world.

The banking systems of Sweden and Canada are ranked at the top of the world due to their oversight and liquidity requirements.

This is the ranking from 2010 and since then, the Canadian, Swedish and Australian banks have all moved up.

http://www.gfmag.com/tools/best-banks/10533-worlds-50-safest-banks-2010.html#axzz1TvgGazkp

[Tokay]

Never put all your eggs in one basket.

I wouldn't keep more in a Thai bank (or any bank that is in an unstable country) than I was willing to lose, should a worst case scenario happened. Rules change here often and if push came to shove, foreigners will lose. And truth be told, there is no telling what chaos may or may not happen here once HMTK passes, which unfortunately will come sooner than later.

Look into strong banking countries such as Cyprus or Switzerland, and open multiple currency accounts. Don't keep it all in once currency, especially these days, that is foolish. It is easy to send wires to Thailand as you need, every few months or whatever fits your lifestyle.

[Tokay]

But personally, I wouldn't keep over 1M in Thailand...I prefer keeping the bulk of my savings in my home country.

Want to to share your logic on this point?

The complete deposit protecion system was in introduced in Thailand by the establishment of the Deposit Protection Agency (DPA) on 11 August 2008, in accordance with the Deposit Protection Agency Act B.E. 2551. The objectives of the Agency as specified by law are providing protection to deposits in financial institutions system; administration of institutions subject to control under the Financial Institutions Businesses Act and liquidation of financial institutions whose licenses have been revoked. Deposit in Thailand is fully guaranteed until September 2011, It will be decreace to THB 1,000,000 in 2012

[UphillStruggle]

Never put all your eggs in one basket.

I wouldn't keep more in a Thai bank (or any bank that is in an unstable country) than I was willing to lose, should a worst case scenario happened. Rules change here often and if push came to shove, foreigners will lose. And truth be told, there is no telling what chaos may or may not happen here once HMTK passes, which unfortunately will come sooner than later.

Look into strong banking countries such as Cyprus or Switzerland, and open multiple currency accounts. Don't keep it all in once currency, especially these days, that is foolish. It is easy to send wires to Thailand as you need, every few months or whatever fits your lifestyle.

You sure about Cyprus?

http://www.ourbusinessnews.com/moodys-downgrades-cyprus-over-economic-woes/

[JimGant]

If you have more than $250,000 on deposit in the bank, you may have more--or less--deposit insurance coverage than you think. Use EDIE--Online to calculate your FDIC insurance coverage [From the FDIC website]

If you have many of your US assets concentrated in one financial institution, the now permanent $250k (vice the old $100k) insurance cap goes a long ways toward providing complete coverage. But, as I found out at USAA, I still had a few holes to plug.

FDIC has a very useful tool to double check your coverage ("EDIE"), which is found HERE

For example, by adding a "pay on death" (POD) beneficiary to an account, you've just added an additional $250k in coverage.

I actually got miffed at USAA for not pointing out that I was under insured. You would think a full-service operation like theirs would have a simple software program that would detect such things. They did tell me about EDIE, however -- which I had already used to fix my problem.