PM Somchai meets with bankers
The Nation – 7 November 2008
Prime Minister Somchai Wongsawat has summoned top executives of 16 commercial banks to a meeting, where a discussion on the banking industry took place amid rumours that banks are reluctant to lend new loans.
He said that bank executives were also asked to comment on what the government should do.
"They did not ask for any special help as they could rely on their own. However, they proposed 6-7 measures. One of them concerns the Deposit Insurance Act, which would erode confidence among large depositors. I quite agree to the proposal as I'm not a supporter of the law. As such, we delay the enforcement by 3 years. The immediate enforcement would rock confidence as depositors could shift money to other markets and lead to liquidity problems to banks. Though the executives said that their conditions are solid, but we need a preventive measure," he said.
Somchai said that deposit withdrawals partly contribute a liquidity shortage. Though the problem is not serious but few lendings are because banks need to be cautious.
He noted that though this is understandable, banks should not entirely stop lending. He noted that banks should adopt a neutral approach and should continue lending particularly to small borrowers with fixed income.
He added that the government has so specific target how much bank lending should be. He also told reporters that the interest rate was not a topic in the discussion, as it is the Bank of Thailand's responsibility.
|
