Introduction to the Thai Bank Museum The Evolution of Money The Evolution of Banking The Prototype for Thai banks Siam Commercial Bank’s Advance to the present
Introduction
The Book Club
The Siam Commercial Bank Company Limited
The Thai Panich (Siam Commercial) Bank
SCB Historical Highlights during 1957 – 2007
The SCB and the development of commercial banking in Thailand
The Government Savings Bank
The Bank of Thailand

A study of the history and development of commercial banking in Thailand, is implicitly a study of The Siam Commercial Bank’s history. On the other hand, a study of the history of The Siam Commercial Bank is also a study of the evolution of the country’s commercial banking system following foundation of The Thai Panich (Siam Commercial) Bank in 1906.

Commercial banking began in Thailand in 1888 when the first of three foreign bank opened branches to provide services related to international trade, the purchase and issuance of bills of exchange and documents for monetary exchange. As these services were provided by foreign bankers and were available only in Bangkok, or in provinces that had good potential for the banking business, a more general system of branch banking was not developed to include the extension of loans, financing investment and other banking services.

Limited financial liquidity and general market risks also acted as obstacles to this development. The successful establishment of The Siam Commercial Bank encouraged Thai and Chinese merchants to found other commercial banks from 1907.

Since then seven commercial banks have been set up in Thailand comprising the branches of foreign banks, The Siam Commercial Bank, and the other banks founded by the Chinese merchants. These banks operated their business without any branch until 1912, when the SCB opened its branch in the same building as the Yu Seng Heng Bank (or the subsequent Siam-Chinese Capital Bank), at the port on Ratchawong Road.

Thus The Siam Commercial Bank is regarded as the first bank to implement the branch-banking system in Thailand. Besides normal banking services, the SCB introduced the first “saving account service” in 1910. This encouraged people to save their money for use in case of emergency and also enabled the bank to generate strong cash flows.

As the Chinese bankers had good knowledge of trade, especially exports of agricultural products and commodities such as rice, teakwood and tin, the commercial banks founded after 1907 focused mainly on international trade and had relatively small capital bases. However, the country’s rice crop failed between 1909 and 1912, and many domestic rice mills and traders were forced to close down. Rice exports declined sharply for several successive years.

With the Thai economy in crisis, trade with China dried up and this adversely affected the newly established commercial banks. With a growing number of bankruptcy cases, limited capital and a shortage of skilled staffs in international banking and finance, banks were unable to continue operating normally and many were forced to shut. This situation severely harmed public confidence in the accountability of the commercial banking system for years to come.

As people were adversely affected by the collapse of these banks, King Rama VI had the idea of establishing a facility to provide a safe haven for deposits and to reduce unnecessary expenses for the people. The King gave royal assent for legislation to establish the government’s savings treasury (Om Sin Legislation) on 26th March 1912. The Government’s Savings Treasury began fully operating on 1 April 1913 at the Government’s Savings Treasury Office in the Grand Palace.

The Treasury was under the control of the Finance Ministry. King Rama VI kindly gave 100,000 baht of his personal money to be used for the Treasury’s administration. This year is considered to be the starting point for the Government’s Savings Bank.

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