Agreed to extend the period for reducing the rate of money transferred to the System Development Fund

Government House, "Rattklao", deputy government spokesperson, revealed that the cabinet has given the green light to approve an extension of the period for reducing the rate of money sent to the Specialized Financial Institutions Development Fund. Ms. Ratklao Inwong Suwannakiri, Deputy Government Spokesperson, revealed that the Cabinet meeting (July 16, 2024) resolved to approve the extension of the period for reducing the rate of contributions to the Specialized Financial Institutions Development Fund, as proposed by the Ministry of Finance (MOF), as follows: 1. Determination of the rate of remittance to the Specialized Financial Institutions Development Fund at the rate of 0.125 percent per year of the amount received from the public for a period of 1 year for the remittance round in 2024 and effective from January 1, 2024. 2. Draft announcement of the Ministry of Finance on the determination of the rate of contribution to the Specialized Financial Institutions Development Fund B.E. ..., which has the m ain content of extending the period for reducing the rate of contribution to the Specialized Financial Institutions Development Fund of 4 Specialized Financial Institutions, namely, the Bank for Agriculture and Agricultural Cooperatives (BAAC), the Government Savings Bank, the Government Housing Bank (GHB), and the Islamic Bank of Thailand (GHB), by reducing the rate of contribution to 0.125 percent per year of the amount received from the public for the remittance round in 2024, effective from January 1, 2024 to December 31, 2024. Mrs. Ratklao said that due to the current situation of the COVID-19 outbreak, which has begun to ease and the economy has begun to recover, it still affects the customer groups of specialized financial institutions, most of whom are vulnerable retail debtors and the grassroots economy who are still recovering and may not be able to repay debts as usual. Therefore, specialized financial institutions are an important mechanism to support the economy and must continue to provide assi stance and alleviate the suffering of such debtors. In addition, the Minister of Finance has ordered the four specialized financial institutions to prepare new project proposals or measures that clearly reflect that if specialized financial institutions receive a reduction in the remittance rate to the Specialized Financial Institutions Development Fund, they will be able to pass on the reduction in the remittance rate to truly and tangibly assist the debtors of specialized financial institutions. Therefore, in order to ease the burden of costs for specialized financial institutions and to require specialized financial institutions to pass on the reduction of remittance rates to help debtors of specialized financial institutions, especially to help vulnerable debtors, the grassroots economy group, and informal debtors, the Office of the Civil Service Commission (OCSC) considered and agreed to extend the period of reducing the remittance rates to the Specialized Financial Institutions Development Fund by 4 sp ecialized financial institutions, namely BAAC, Government Savings Bank, GH Bank, and GH Bank, from the original rate of 0.25 percent per year to 0.125 percent per year of the amount received from the public for another year for the remittance round in 2024, from January 1, 2024 to December 31, 2024, and to return to the rate of 0.25 percent per year for the remittance round from 2025 onwards. The Specialized Financial Institutions Development Fund Committee, at its 3/2024 meeting on 30 April 2024, considered reviewing the rate of contributions to the Specialized Financial Institutions Development Fund and resolved as follows: 1. Approved the extension of the period for reducing the rate of contributions to the Specialized Financial Institutions Development Fund of the 4 Specialized Financial Institutions by reducing the rate of contributions by half from 0.25 percent per year to 0.125 percent per year of the amount received from the public for another year for the remittance round in 2024. 2. Assign the Se cretariat of the Fund Committee to draft the Ministry of Finance Announcement on the Rate of Contribution to the Specialized Financial Institutions Development Fund B.E. ... with the following important points: -Repealing the Ministry of Finance's announcement on the rate of money to be transferred to the Specialized Financial Institutions Development Fund B.E. 2566 dated March 7, 2566 -Requiring specialized financial institutions to transfer money to the Specialized Financial Institutions Development Fund at the following rates: (1) 0.125 percent per annum of the amount received from the public for remittance in the year 2024; (2) 0.25 percent per annum of the amount received from the public for remittance in the year 2025 onwards; (3) Effective from 1 January 2024 onwards. The four specialized financial institutions have prepared project details or measures to help debtors. They can pass on the reduction of the remittance rate to help debtors of specialized financial institutions, including vulnerable retail debtors, the grassroots economy, and informal debtors. These include (1) reducing the interest rate of loans at a special concessional rate for general debtors, such as reducing the interest rate for good retail debtors (Minimum Retail Rate: MRR), etc. (2) reducing the interest rate or interest receivable according to the contract, and (3) changing the order of debt repayment that causes the debtor's principal to decrease in every installment that passes. It is expected that this will help approximately 5 million debtor accounts. The Bank of Thailand (BOT) has an opinion on the operation of the Specialized Financial Institutions Development Fund that it should consider the adequacy of liquidity to operate according to its future missions and should have a process to monitor and evaluate the results of the transfer of assistance from Specialized Financial Institutions to debtors continuously to show that the reduction in the remittance rate has been transferred to help debtors in a real and tangible wa y. In addition, it should be careful not to create incentives for unaffected debtors to stop paying debts (moral hazard) so as not to affect good financial discipline. Source: Thai News Agency