Financial Institutions Policy

Institutional Framework

Financial institutions serve as the intermediary that allocates resources from savers to investors across economic sectors. Due to the close linkage with domestic and external economic sectors, the BOT, therefore supervises financial institutions with the objectives to ensure the followings. (1) Financial institutions serve the need of real economy efficiently, (2) Financial institutions are competitive, and (3) Individual financial institution and the overall financial institution system remain sound and stable. In obtaining the 3 aforementioned objectives, the following 5 institutional frameworks have been drawn:

to ensure that financial institutions are prudent and have proper risk management system

to enhance overall efficiency of financial institutions

to ensure good corporate governance of financial institutions

to ensure fairness of financial institutions in doing business with their customers, and

to supervise financial institutions in order to safeguard economic and financial stabilities

Policy Formulation Process

The BOT has a clear and transparent process for formulating financial institution policies and prudential regulations. The process includes rational analytical studies, necessity, advantages, drawbacks, international standards, practices of neighboring country, and impacts on the financial institutions system. In addition, industry hearings are held regularly and policies are also subject to scrutiny by the Financial Institutions Policy Committee (FIPC)

After issuance of policy and regulation, the BOT periodically monitors and revises them to ensure that they are still appropriate, practical, and effective, as well as do not pose an unnecessary burden for financial institutions. BOT notifications and circulars are made publicly available in the Royal Gazette and the BOT website.

Financial Institutions Policy ​​

Financial Institutions Policy