Thai bank to provide Islamic banking services

State-owned Krung Thai Bank (KTB) will launch Islamic banking services for the first time in the country early next year, according to a top executive.

Preecha Bhukam, Assistant President of Krung Thai Bank, told Thai news agency TNA on Friday that KTB was now ready to provide Islamic banking services to Muslim clients, making it be the first commercial bank in the country to launch the services.

The first operations would open in one of three large Muslim provinces in the South, either Yala, Pattani or Narathiwat, in February, 2002, he stated. "A study for the most suitable place of the first operations is being conducted, and a final decision will be announced before the Islamic services are launched in February," he noted. The services would then be expanded to other provinces with potential, including Bangkok, but most of the operations were expected to be focused in southern provinces, where a large number of population are Muslims, he disclosed. Currently, only the Government Savings Bank (GSB) provides Islamic banking services in Thailand.

To comply with Islamic principles, which forbids charging or paying interest, KTB will offer interest-free deposits and credit, according to Preecha. Deposits would be invested in projects on which depositors could, instead, earn dividends, and related deposit accounts would be separated from normal accounts, he disclosed. A separate entity could be established in the future to manage the related accounts, said Preecha.