Financial markets/ Financial institutions : Bank Deposit Accounts

Overview

• There are three principle types of bank deposit: current accounts, saving accounts, and fixed-term deposit accounts. In general, fixed-term deposits may have terms of three, six, 12, or 36 months. Thai banks offer a wide variety of deposit accounts, for example: special fixed rate accounts offering higher interest than do conventional fixed-term accounts; combined fixed-term accounts that put together different types account and yield special interest rates; and deposit accounts tied to the purchase of insurance, attracting savers while increase the bank's fee income.

• Main competitors for bank deposits include financial instruments on the capital markets such as, for example, mutual funds, bonds and shares, as well as gold and insurance.

• Major factors affecting the volume of bank deposits include: the interest rates offered by banks as compared to rates of return offered by other investment options; changing economic conditions, which impact savings behavior; money velocity. The appetite for risk on the part of savers is another factor affecting the volume of deposits. The volume of bank deposits is also impacted by the conditions that banks place on accounts and by changes in standards and criteria, such as requiring banks to subscribe to the Deposit Protection Agency.

• With over 10 percent each, four large Thai banks hold 65.5 percent of total deposits in the banking system. Savings accounts play the largest role, accounting for 38.6 percent of deposits in all types of account at year-end 2008, with 75.3 million accounts, 98 percent of which had balances of less than one million THB (29,000 USD).