Thai financial institutions system back to normal after massive withdrawals

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BANGKOK, Feb 21 – A run of massive withdrawals of deposits at the Government Savings Bank (GSB) have ended and Thailand’s financial institutions system has returned to normal, a senior central bank official said today.

Roong Mallikamas, Bank of Thailand (BoT) spokesperson, said the unusual deposits and withdrawals at GSB on  Feb 17-19 resulted in significantly higher withdrawals of banknotes from the central bank, compared to the corresponding period last year.

The phenomenon was reported in Bangkok and outlying provinces, the central region and the South, she said, adding that the BoT normally reserves cash for three months of withdrawals.

The Government Savings Bank suspended interbank loans to the Bank of Agriculture and Agricultural Cooperatives (BAAC) following strong objections by the anti-government People’s Democratic Reform Committee (PDRC) which triggered the massive withdrawals at GSB.

The lending was aimed at boosting BAAC’s liquidity in paying farmers for their rice from the 2013/2014 crop under the state’s rice pledging scheme. Farmers have been waiting for overdue payments since September.

She said the Monetary Policy Committee (MPC) would decide on March 12 on whether this year’s gross domestic product (GDP) would have to be readjusted due to the political unrest.

The GDP growth projected by the National Economic and Social Development Board at 0.6 per cent in Q4 last year, or 2.9 per cent for the entire year, was almost similar to the MPC’s forecast, given low spending expansion in the private sector, she said.