INTRODUCTION OF ISLAMIC BANKING SYSTEM IN THAILAND
The Idea of setting up the Islamic Bank in Thailand emerged from Muslim population’s need for financial services that comply with Shariah principles, especially those residing in the country’s three southern boarder provinces. In 1998 the government impelled the development of Islamic banking system in many forms to facilitate Thai Muslims in conducting their banking transactions in conformity with Shariah principles. As the government intended to set up an Islamic Bank under the government’s jurisdiction with its own sets of law, the Ministry of Finance was then assigned to draft ‘The Islamic Bank of Thailand Act’, which was later approved by the parliament in October 2002.
THE EMERGENCE OF THE BANK
Islamic Bank of Thailand or “ibank” is set up under the Islamic Bank of Thailand Act B.E.2545 (2002) and regulated by the Ministry of Finance. The Bank commenced its operations on June 12, 2003 with paid-up capital of 1 billion baht and had its head quarter, which was also the first branch, in Klongton. The Bank continued to open branches especially in Bangkok and Southern provinces and had a total of 9 branches by the end of 2004.
ACQUISITION OF SHARIAH BANKING SERVICES FROM KRUNG THAI BANK PCL.
The expansion of the Bank’s business continued through the acquisition of Shariah Banking Services of Krung Thai Bank PCL in November 2005 under the government’s policy. This increased the number of branches from 18 to 27 In August 2006, the Bank relocated its head quarter from Klongton to the central business district, Asoke, to facilitate growing business and increase operating efficiency.
REFORM INTO STATE-OWNED ENTERPRISE
During the initial stage of operation, ibank focused solely on Muslim market segmentation. However, the Bank sees the opportunity of expanding Shariah banking services to general public, and thus, creates and develops more along with promoting ethical culture, social responsibility, Islamic principles and good governance through the operational framework. These allow ibank to differentiate from competitors and become an alternative bank for everyone regardless of his or her religion. In October 2007, the Ministry of Finance became ibank’s major shareholder and this has made the Bank a state-owned enterprise thereafter.
Currently, the bank’s major shareholder, the Ministry of Finance, has raised its stake in the bank to almost 100 percent (99.59%) after the amendment of the Islamic Bank of Thailand Act B.E.2545 (2002). The amended act, Islamic Bank of Thailand Act B.E.2561 (2018), commonced on July 18, 2018 which allows the Ministry of Finance to own more than 49 percent as the bank’s major Shareholder for a proper period of time. Now, ibank has 99 branches throughout the country.