Thailand’s initiative to introduce virtual banks has entered a critical stage, with the Bank of Thailand (BOT) enforcing strict regulatory compliance for the three remaining applicants.

Candidates, which include major consortia involving entities like CP Group, Krung Thai Bank, and SCBX, are required to finalize their organizational and business structures to meet central bank standards.

Failure to adhere to these criteria or provide sufficient justification for deviations could result in the revocation of a licence, potentially leading to a market with fewer than three operators as there are no provisions to replace disqualified applicants.

Key Points

• Finalists: The three applicants currently under review are ACM Holding (CP Group), a consortium led by Krung Thai Bank (with AIS and OR), and SCBX (partnering with KakaoBank and WeBank).
• Compliance Requirements: Applicants must ensure that financial businesses are separated from non-financial entities to mitigate risks and prevent conflicts of interest, such as unauthorized lending or preferential pricing for affiliates.
• Adjustments: To meet criteria, companies may need to reduce shareholdings in conflicting businesses, surrender non-core financial licences, or restructure their holdings.
• Approval Process: The Bank of Thailand will evaluate the applicants’ explanations on a case-by-case basis and provide recommendations to the Finance Ministry, which holds the final authority for granting licences.
• Strict Oversight: The BOT has emphasized that there is no policy to replace failed applicants with reserves from the initial round, meaning the final number of virtual banks could be fewer than three.
• Preparation Phase: Once in-principle approval is granted, successful applicants will be given approximately one year to ensure their systems meet security and financial stability requirements before launching.

The BOT maintains a rigorous stance, indicating that if an applicant fails to meet requirements and cannot provide a valid justification, their license will be at risk. There is no plan to replace disqualified candidates, meaning the market could potentially launch with fewer than three operators.

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