BANGKOK, July 23 – Tough competition in the money market has compelled Thai commercial banks to maintain their interest rates despite the central bank’s decision to reduce the policy interest rate by 0.25 per cent, from 2.75 per cent to 2.50 per cent, according to the July report of the Bank of Thailand (BoT).
In its report on commercial banks’ liquidity and interest rate adjustment, the BoT said commercial banks must keep their market shares on savings despite having to bear the higher cost.
This is because most commercial banks want to expand their loan operations in the future.
Commercial banks must maintain their customers’ savings bases to prepare for tighter liquidity in future given the government’s mega projects on water management and infrastructure development, the BoT report adds.
It is necessary for the government to mobilise capital through state commercial institutions for the mega projects, which contributes to tougher competition, the central bank predicts.
Different business strategies, especially among small and medium-size commercial banks, such as loans for hire-purchase cars and first-car purchases with tax incentives from the government have intensified competition in the money market, the report adds.
