Massive deposit withdrawals irk Govt Savings Bank

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BANGKOK, Feb 17 – The Government Savings Bank (GSB) announced today it would suspend new lending to the Bank of Agriculture and Agricultural Cooperatives (BAAC) after depositors withdrew Bt30 billion from the bank in a single day.

The massive withdrawals were a civil retaliation against the GSB decision to extend Bt5 billion interbank loan to the BAAC without any guarantee from the Finance Ministry, to enable the BAAC to pay farmers for the rice pledging scheme.

Woravit Chailimpamontri, GSB president, promised that the GSB would not grant additional loans to the BAAC, adding that the BAAC could pay back the Bt5 billion borrowing before the 30-day deadline if possible.

He said 40 per cent of the withdrawals were in Bangkok, outlying areas and in the South while the GSB has explained to major depositors and financial institutions and asked them not to withdraw. They agreed.

He was optimistic that the abrupt withdrawals at the GSB could stop tomorrow.

The GSB reported Bt10 billion deposits and Bt30 billion withdrawals today – a Bt20 billion deficit, and Bt230 billion in liquidity.

Regarding the Finance Ministry’s planned tender for Bt100 billion loans on March 4, Mr Woravit said the GSB would have to review the bid.

The GSB president is scheduled to explain the Bt5 billion lending to the GSB Board of Directors and the Senate standing committee on finance and banking tomorrow.