22 February 2010
COMMERCIAL BANKING ACT
BHUMIBOL ADULYADEJ, REX.,
Given on the 13th day of April B.E. 2505;
Being the 17th year of the Present Reign.
By Royal command of His Majesty King Bhumibol Adulyadej, it is hereby
Whereas it is deemed expedient to revise the law relating to commercial banking;
Be it, therefore, enacted by His Majesty the King, by and with the advice and consent
of the Constituent Assembly in the capacity of Parliament, as follows:
Section 1. This Act shall be called the “Commercial Banking Act B.E. 2505”.
Section 2. This Act shall enter into force on and from the day following the date of its
publication in the Government Gazette.
Section 3. The “Commercial Banking Act BE. 2488” shall be repealed.
Section 3 bis. 1This Act is a law concerning the restriction of the freedom in a
premise, the right in property of a person, and the freedom in operating a business or occupation
which is enacted by virtue of Section 35, paragraph two, Section 48, and Section 50, paragraph
two, of the Constitution of the Kingdom of Thailand.
Section 4. 2In this Act,
“commercial banking” means the business of accepting deposits of money subject to
withdrawal on demand or at the end of a specified period and of employing such money in one or several ways such as : (a) granting of credits, (b) buying and selling of bills of exchange or any
other negotiable instruments, (c) buying and selling of foreign exchange;
“commercial bank” means a bank licensed to undertake the business of commercial
banking and includes a branch of a foreign bank licensed to carry on such business;
“limited public company” means a limited public company formed in accordance with
the law on limited public companies;
“limited company” includes a limited public company;
“capital funds”3 means the sum of
(1) the paid-up capital, including premiums of share received by a commercial bank
and money received by such commercial bank as a result of issuance of certificates representing
the right to buy shares of such commercial bank;
(2) statutory reserve;
(3) reserves appropriated from net profits at the end of each accounting period in
accordance with the resolution of the shareholder’s general meeting or the regulations of such
commercial bank, excluding reserves for diminution of the values of assets and reserves for
repayment of debts;
(4) net profit after appropriation;
(5) reserves arising from assets revaluation, other reserves; and
(6) money which a commercial bank receives from issuing a long-term debt
instrument with a term to maturity of over five years and with right ranked after ordinary creditor.
For the capital funds under (1), (2), (3) and (4), losses incurred in all previous
accounting periods shall be deducted first and goodwill shall be deducted in accordance with the
rules, procedures and conditions as prescribed by the Bank of Thailand.
The type, category and calculation of the capital funds under (5) or (6) shall be in
accordance with the rules, procedures and conditions as prescribed by the Bank of Thailand.
For the capital funds under (1), (2), (3), (4), (5) and (6), the amount of money in the
instrument under (6) of finance companies and other commercial banks which such commercial
bank holds, and any assets, shall be deducted in accordance with the rules, procedures and conditions as prescribed by the Bank of Thailand;
“granting of credits” means lend money, buy, discount or rediscount bills, become a
creditor upon having paid of ordered that an amount of money be paid on behalf of a customer, or
become a creditor upon having paid in accordance with an obligation specified in a letter of
“certificate of deposit” 4 means a negotiable instrument issued by a commercial bank
to a depositor as evidence of accepting deposits of money and as representation of the right of the
holder of such negotiable instrument to have the money repaid at the end of a fixed period, with
or without interest specified therein;
“financial institution” 5 means:
(1) finance company, finance and securities company and credit foncier company
under the law governing finance, securities and credit foncier businesses;
(2) other juristic person prescribed by the Minister as published in the Government
“Minister” means the Minister having charge of the enforcement of this Act.
Section 56. Subject to the provisions of Section 5 quarter and Section 5 quinque, a
commercial bank, except a branch of a foreign bank, shall be established only in the form of a
limited public company and with a license granted by the Minister.
An application for a license shall contain such particulars as the Minister may
prescribe and steps to form a limited public company may be taken only after approval of the
Section 5 bis. 7 No person shall hold more than five per cent of the total amount of a
commercial bank’s shares sold except in the case where shareholders are governmental agencies, state enterprises under the law on budget procedures, the Financial Institutions Development
Fund under the law on the Bank of Thailand, or juristic persons established under a specific law.
In the event that it is necessary to rectify the condition or operation of a commercial bank, the
Minister, with the advice of the Bank of Thailand, shall have the power to permit the holding of
shares as otherwise. Such permission may be granted with any condition.
          
1 As amended by the Royal Proclamation Amending Commercial Banking Act, B.E. 2505 (1962) (No.4) B.E. 2541 (1998)
2 As amended by Section 3 of the Commercial Banking Act (No.2), B.E. 2522