Rapid Assessment for Resilient Recovery and ... - GFDRR

Microfinance, including micro-agricultural finance, is a sector that has particularly high
needs in comparison to the small (and uncertain) levels of funding usually available. This
is a sector that merits particular attention.
Leasing companies and credit card companies will have their roles to play in the recovery,
but they will be relatively small, and there is no government subsidy that would be justified
here.
The most important part of the financial sector, in terms of ensuring resilience and that
future financing is not impeded, is the insurance sector. To avoid excessive increases in
the cost of catastrophe insurance, it is recommended that the government seriously study
and prepare for the establishment of a catastrophe insurance pool. Further discussion and
costing is included in the Disaster Risk Management chapter, whilst in this chapter we will
only look at the needs of the private insurance companies in order for them to return to a
pre-flood situation, leaving aside the issue of the catastrophe insurance pool.
Sector Context
Banking and Related Sectors
Both commercial banks and SFIs are already very busy trying to estimate the losses to
their borrowers, and trying to ensure that any viable borrowers are helped to get back to
productivity as soon as possible. Hundreds of thousands of clients are being contacted,
being informed of the moratoria 60 on their loan payments where applicable and that they
should borrow from banks rather than loan sharks (when applicable).
The Bank of Thailand appears to have been very active in trying to minimize the impact
of the floods on its banks, without encouraging needless risk-taking. For example, during
the worst of the crisis, the Central Bank held videoconferences with all of the major banks
to review the flood situation as it impacted the financial sector. 61 Similarly, the Ministry of
Finance has taken dynamic measures. The next section will discuss how some of these
might be altered to increase impact or reduce potential damage to the private banking sector.
Below is a list of all the government measures designed to lessen the impact of the floods
on impacted clients (or future clients) of the financial sector that the team is aware of. This
list of measures alone amounts to a potential cost to the government of THB 234 billion,
with parallel private sector contributions of up to THB 131 billion (not including commercial
banks’ independently funded new loans to flood victims).
60 Commercial banks can, at their discretion, offer flood victims grace periods of whatever duration they see fit, without
changing their provisioning status. However, the Thai Bankers’ Association recommends that these grace periods be no
longer than 12 months.
61 “BOT, Banks ready with back-up plans”, The Nation, October 27, 2011.
66 THAI FLOOD 2011 RAPID ASSESSMENT FOR RESILIENT RECOVERY AND RECONSTRUCTION PLANNING