Thai Finance Ministry sets eligibility for virtual bank licences

The Thai Finance Ministry unveiled the eligibility criteria for obtaining a virtual bank licence, which includes a minimum registered capital requirement of 5 billion baht (US$139 million). The specifications were published in the Royal Gazette on March 4, as revealed by Paopoom Rojanasakul, secretary to the finance minister.

Virtual banks will be mandated to establish their headquarters in Thailand and will initially need to register capital of at least 5 billion baht. This will be increased to 10 billion in the second phase. Furthermore, joint ventures will be permitted, enabling the sharing of specific expertise.

Following the attainment of the licence, the virtual banks can incrementally increase their capital to 10 billion baht (US$278 million) over a span of five years until the maximum registered capital requirement is fulfilled. The primary focus of these virtual banks will be to cater to those without regular income, small and medium-sized enterprises (SMEs), underserved sections of society, those without access to credit, and individuals with informal debt.

Initially, the plan was to restrict the number of licences to three. However, the final resolution was to impose no constraints on the number of licences, to stimulate competition and to not jeopardise the stability of the financial system. The Bank of Thailand will determine the appropriate number of licences to be issued.

Virtual banks will come under the regulatory purview of the central bank, much like commercial banks. They will also be safeguarded by the Deposit Protection Agency. However, they will be prohibited from using deposit systems, credit systems, or Internet banking in conjunction with other domestic or international financial institutions.

Director-general of the Fiscal Policy Office, Pornchai Thiraveja, has stated that applications for virtual bank licences can be submitted to the central bank from March 20 to September 19. The applications will be jointly reviewed by the central bank and the ministry for a period of nine months post the application deadline.

Digital economy

Approved applicants will then have one year to prepare their financial stability, IT systems, and risk management to commence operations, reported Bangkok Post.

The promotion of virtual banks is aligned with the government’s policy to foster a digital economy and develop financial infrastructure. This move aims to transform Thailand into a financial hub in Southeast Asia and enhance public access to financial services.

The ministry envisions virtual banks as providing additional financial service options, accelerating adaptation to the digital economy, and boosting the efficiency of the financial system, thus contributing to the country’s economic development and growth.