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thai central bank was unconcerned over significant numbers of withdrawals
By k on July 17, 2009
BANGKOK, July 17 (TNA) – Bank of Thailand (BoT) Assistant Governor Paiboon Kittisrikangwan on Thursday said the central bank was unconcerned over significant numbers of withdrawals from commercial banks to invest in government savings bonds issued under the “Stronger Thai” scheme.
He said the funds transfer in the banking system is considered normal, but conceded that the issuaning of the saving bonds, which offer an average interest rate of more than 4 per cent, might force commercial banks to raise their deposit rates to maintain their customer base.
In addition, it might prompt the banks to introduce new financial products with higher interest to attract new clients and maintain their customer base.
However, it depended on the policy of each bank as some banks might need not to mobilise deposits because lending was lower than targeted.
The deposit rate hike would benefit consumers as rates had dropped too quickly in recent time.
Mr. Paiboon said he believed the government’s issuing of savings bonds at a face value of Bt 80 billion altogether would not affect liquidity in the banking system since current liquidity remains sufficient and the loan to deposit ratio has stayed at 84.04 per cent.
Additionally, the proceeds from selling the bonds will circulate in the country’s economic system, he added. (TNA)
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