Thai central bank adjusts rules on banking capital instruments

[BANGKOK] Thailand's central bank said on Thursday it had adjusted rules on financial instruments qualified as banking capital, aiming to ease investor concerns about banks' payment of interest and enable them to raise more capital for lending.

On tier 1 capital financial instruments, issuance banks are allowed to pay interest or other returns without prior Bank of Thailand (BOT) approval if their capital adequacy ratios are above requirements, the central bank said in a statement.

For tier 2 capital instruments, the BOT has revoked the clause requiring banks to have the rights to postpone the schedule for interest payments, it said.

The amendment was "to assuage investors' concerns regarding payment of interests." "As a result, banks can raise capital more easily which in turn increases banks' capital level and liquidity," the BOT said.

"Banks should therefore be able to provide additional loans to businesses and households to support economic recovery."

REUTERS