2. A regulatory and supervisory regime for financial cooperatives should be defined and
its implementation initiated that is proportionately equivalent to that applied to the banking
system. The Cooperative Promotion Department (CPD) of the MoAC is responsible for promoting
cooperatives and for regulating and supervising them. In the medium term, MoAC should do its
utmost to separate its regulation and supervision functions from its promotion function and ensure
the independence of the former. Ongoing collaboration between the BoT and the MoAC should be
institutionalized, and the regulatory and technological capacities of the CPD and the Cooperative
Audit Department (CAD) of the MoAC as well as CPD’s enforcement powers should be strengthened.
3. Given the risks and social implications of high indebtedness of cooperative members,
CPD should work closely with BoT and the cooperative federations to determine the actual
level of debts. The monitoring of loan portfolio should be strengthened, and the authorities should
consider requiring cooperatives to report their members’ debts and repayments to the NCB. In
addition, it is advised to enhance CPD’s supervisory capacity to adopt BoT’s recommended
macroprudential measures to cooperatives as appropriate and to assess options to establish
liquidity and/or solvency funds under close oversight of CPD. The capacity of cooperative
federations should also be strengthened to provide services to their members, such as information
technology, management, and internal control, provided that they are properly regulated and
supervised according to their roles and functions.
4. There is no financial safety net for financial cooperatives. Deposits at Thai financial
cooperatives are not backed with deposit insurance, and the Thai federations do not have
mechanisms or dedicated funds that could be tapped by a distressed affiliate. An exception is a
voluntary emergency liquidity arrangement that is being tested by one federation which has
attracted 50 TCCs to participate on a voluntary basis. However, the cooperatives’ funds are placed as
term-deposits and can be withdrawn at maturity, making this scheme an unreliable safety net.
THAILAND
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