Thailand to have full-fledged Islamic bank in May

Thailand is likely to have its full-fledged Islamic Bank in May, as preparation of Krung Thai Bank Plc. (KTB) to launch the Islamic banking system, separately in both management and operational aspects from its normal commercial banking businesses, is expected to be completed by the time, Thai news agency TNA said quoting a KTB top executive.

Theerasak Suwanayos, Advisor of the KTB Board, in his capacity of Designated President of the Islamic Bank, told TNA on Monday that much progress had been made for the establishment of the Islamic Bank.

"A KTB panel in charge of studying and working out the project has conducted a survey in various areas concerning Islamic banking and principles thoroughly, including seeking opinions and gathering information from local Islamic people and institutions to ensure that the operation of the new Islamic Bank will fully comply with Islamic principles, and is trustable and reliable for Islamic people," he stated.

Theerasak assured that the key point worried by Islamic people over the mixing up of their deposits prohibited by the Islamic principles from gaining interests or returns with those usable for gaining interests would never be happened in the new Islamic Bank, as KTB would separate both the management and banking transactions of the Islamic Bank from its normal banking system.

The worrying point has made existing Islamic Banks operated on the trial basis by the Government Savings Bank (GSB) and Bank for Agriculture and Agricultural Cooperatives (BAAC) not be successful, according to Theerasak.

KTB would launch the Islamic Bank as its full branch offices, with 6-12 staff each, in three provinces in the South, including Yala, Pattani, and Narathiwat, where the majority of local people are Muslims, he disclosed.

For outer and remote areas, special counters would be opened at KTB's branch offices covering five southern provinces, including Songkhla, Satul, Yala, Pattani, and Narathiwat, to offer Islamic banking services to local people, he said.

"KTB plans to sign contacts on exchange of consulting services with National Islamic Bank of Malaysia and MayBank in mid March, and plans to open the Islamic Bank in May," he noted.

"People who are not Muslims, but are willing to follow Islamic principles are also welcomed to use the new Islamic Bank's services," he added.

In the initial stage, the new Islamic Bank would offer four key services, including current account service, deposit maintenance service, deposits for general investment service, and deposits for special investment service, the former two of which will have no interest returns to clients who, instead, have to pay fees for asking the bank to secure their deposits, he described.

Clients apply for the deposits for general or special investment services would be able to receive returns to their investment, but they would also be responsible for any loss of the investment, he indicated.

Most of the investment will be in the form of joint ventures with local entrepreneurs or enterprises.

Theerasak said that the Islamic Bank was, therefore, considered beneficial to the rehabilitation of local small and medium-sized enterprises (SMEs).

The Islamic Bank will have its own name and logo, as it will become an independent bank once state-run KTB completes its privatization process, according to Theerasak.

KTB had earmarked a capital of Btone billion to operate the new Islamic Bank, he said.