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Finance
companies cannot take deposits, but they can raise funds by
issuing promissory notes or similar instruments; these, in turn,
are lent to businesses and individuals. Finance companies come
into existence in 1969 and have grown rapidly, reaching a total of
91 as of December 1993. Of these, 20 companies are licensed to
offer only finance services, 71 to provide both finance and
securities services, and 13 to offer only securities services and
17 credit fonciers companies. Finance companies are not subject to
the same interest rate restrictions as commercial banks on their
promissory notes, but are subject to the same restrictions on
lending rates.
Many
finance companies also perform the functions of investment banks
by underwriting and marketing the securities of private sector
companies. While some of the larger, finance companies have been
moving towards term lending ,the bulk of their assets are still
concentrated on short-term consumer financing and cheque
discounting services. With the passing of the Finance Business,
Securities and Credit Fonciers Business Act of 1979 and its
revision of 1983, all finance companies are to be authorized and
regulated by the Ministry of Finance and the Bank of Thailand.
Agricultural
cooperatives are organized by farmers for concerted efforts in
agricultural activities including the provision of credit to
members, while savings cooperatives are formed on an occupational
basis with most of the members being salary earners. The
agricultural cooperatives obtain most of their funds from the BAAC
and lend them directly to member farmers. The savings cooperatives,
on the other hand, obtain their loanable funds through a payroll
withholding system. The loans given by the savings cooperatives
are mostly for meeting current needs, or unexpected expenses or
for financing the purchase of consumer goods.
There
are at present 12 life insurance companies in Bangkok with
branches throughout the country. Of the different types of life
insurance, endownment is the most popular, accounting for about 80
percent of all policies sold. The Life Insurance Act (1958)
requires each company to maintain security deposits of two million
baht and capital funds of five million baht. It also specifies the
various forms of investment into which life insurance companies
may put their funds.
Credit
fonciers finance the purchase of land or housing construction.
They may not mobilize funds from the general public but must rely
on their own resources or borrowings. There are at present 17 such
companies, most of them operating in Bangkok.
The
Government Savings Bank is the only wholly government-owned
savings bank in the country. With 528 branches at the end of 1993,
it has been very successful in mobilizing household savings and
invests over 90 percent of its deposits in government bonds.
The
Industrial Finance Corporation of Thailand (IFCT) was established
in 1959. Functioning along the lines of a private development
institution, it is the only industrial development bank in
Thailand. Its sources of funds at present are borrowings from
several institutions. namely, the Thai government, the Bank of
Thailand, the World Bank, the Asian Development Bank, the
Kreditanstalt fur Wiederaufban and the Japan Export-Import Bank.
During the past few years, it has borrowed from the international
market. Its capital, retained earnings, and debenture issues also
provide loanable funds.
The
IFCT makes term loans for financing fixed assets and permanent
working capital. Loans are repayable up to 15 years but the
average maturity is seven to eight years, including a grace period
of two to three years. In addition to lending activities, it also
provides specialized services to industries and has introduced
securities underwrtiting services.
The
Small Industries Finance Office (SIFO) was established in 1964 as
an office in the Industrial Promotion Department of the Ministry
of Industry. Its principal objective is to provide financial
assistance to small industrial enterprises including cottage and
handicraft industries. The SIFO's source of funds is limited to
government budget appropriations. These funds are deposited with a
government-owned bank, which supplements them at a ratio of three
to one. Medium and long-term loans of up to one million baht are
made at low interest rates. Approval of loan applications is given
by SIFO, but collateral evaluation and lending operations are
undertaken by the government bank. In 1993, the operations of SIFO
were taken over by the Small Industry Finance Corporation (SIFC),
with increased loan ceiling up to five million baht per borrower.
The sources of funding are from the Thai Government and financial
institutions.
The
Government Housing Bank, established in 1953, is entirely owned by
the government. Its basic function is to provide financing
facilities to low-income families to obtain houses of their own.
Its sources of funds are borrowings fro the government, the
Government Savings Bank, the commercial banks, its own capital and
retained earnings, and limited savings deposits fro the public.
The
Export Import bank of Thailand was established in 1994. Its basic
function is to provide medium-term credit for agricultural export,
long-term credit for capital goods export, export insurance
service, investment guarantee for overseas investment of Thai
investors and financing small and new exporters without access to
commercial bank lending. The bank also finances import of
machinery and equipment used for export production and import of
goods beneficial to environment. Its source of funding is for the
Bank of Thailand and financial institutions, local and overseas.
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