Financial Sector Master Plan

Phase I (2004-2008)


“We are not aiming to be the most efficient financial institution network. But we are aiming for a financial system that is most beneficial to Thailand’s economic development, especially for the rural areas that have been left behind.” 

Governor M.R. Pridiyathorn Devakula, December 2002



      The 1997 financial crisis and its subsequent economic fallout highlighted many deficiencies within Thailand’s financial system. Since that time, relevant government authorities, together with private sector players, have instituted deeprooted reforms aimed at halting the economic contraction, restore investor confidence, and return the financial sector to a sustainable development path. One of these initiatives was the Financial Sector Master Plan (FSMP), a 5-10 year medium-term development plan for financial institutions under the supervision of the Bank of Thailand.



Vision 1: Provide financial services to all potential, economically viable, users whereby users should have access to basic financial products and services at the appropriate pricing.


Vision 2: Develop competitive, efficient, stable, and balanced financial system, capable of servicing the sophisticated and unsophisticated users; and,


Vision 3: Ensure fairness and protection for customers whereby financial institutions must abide by good corporate governance standard, and consumers receive adequate information and advice from various financial institutions to make informed investment decisions.


Policies and measures 


Core Reform Measures

: serves the fulfillment of Vision 1 and 2.


Vision 1: Provide Financial Service to All Economically Viable Users


Rural Low-income sector

A. Creation of APEX institutions to provide support and improve operations of indigenous community savings and microfinance groups in the rural area.

B. Build upon the success of the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) by broadening its business scope beyond being a pure agricultural bank and towards becoming a rural development bank that provides credit and services to low-income rural consumers, village funds, and all types of cooperatives.


Urban Low-income sector

A. Establish market-based incentives for financial institutions to offer services, especially credit and advisory services, to low-income consumers.

B. Provide new licenses to entrants interested in providing services to the underserved.


Vision 2: Develop Competitive, Efficient, Stable and Balanced Financial System


A. Restructure licensing regime to allow capable financial institutions (both domestic and foreign) with restricted licenses to broaden their scope of business by upgrading themselves to full license financial institutions.

B. Relax regulatory limitations on foreign financial institutions so as to heighten competitive pressure that may encourage faster introduction of new financial instruments and innovation.

C. Permit financial conglomerates to have only one type of deposit-taking financial institution within their group in order to prevent regulatory arbitrage, support industry consolidation and motivate financial institutions to better capitalize on their

economy of scale.


Supporting Reform Measures

: are broad and designed to facilitate all three of the FSMP’s visions. Yet, it is clearly the measure to improve basic financial infrastructure that deals directly with Vision 3 (fairness and protection for customers).


A. Improve Basic Infrastructure of the Financial System

B. Improve Competitiveness of Individual Financial Institution

C. Remove Regulatory Impediments to Financial Sector Development

E. Improve Systemic Efficiency by Strengthening Market-based Mechanisms


Details of the plan

  • Financial Sector Master Plan Handbook

  • Foreign Financial Institutions under the FSMP