The project will support the Government's initiative to promote financial inclusion through a highly consultative process among the concerned government agencies, banks, development partners and saving and credit groups to improve the policy, supervision and regulatory environment for a wider and deeper inclusion of the low-income population to safe and affordable financial services. The project scope includes a diagnostic assessment of the current framework for inclusive finance, development of a national strategy for financial inclusion and implementation plan for consumer protection, financial literacy and microinsurance, strengthened capacity of the Fiscal Policy Office's Bureau of Financial Inclusion Policy and Development to conduct its supervisory responsibility, and initial priority steps taken towards an improved regulatory and policy framework that will facilitate financial inclusion.
|Project Name||Development of a Strategic Framework for Financial Inclusion|
|Project Type / Modality of Assistance||Technical Assistance
|Source of Funding / Amount||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Private sector development
|Sector / Subsector||
Finance / Finance sector development - Inclusive finance - Insurance and contractual savings
|Gender Equity and Mainstreaming||Gender equity|
|Description||The project will support the Government's initiative to promote financial inclusion through a highly consultative process among the concerned government agencies, banks, development partners and saving and credit groups to improve the policy, supervision and regulatory environment for a wider and deeper inclusion of the low-income population to safe and affordable financial services. The project scope includes a diagnostic assessment of the current framework for inclusive finance, development of a national strategy for financial inclusion and implementation plan for consumer protection, financial literacy and microinsurance, strengthened capacity of the Fiscal Policy Office's Bureau of Financial Inclusion Policy and Development to conduct its supervisory responsibility, and initial priority steps taken towards an improved regulatory and policy framework that will facilitate financial inclusion.|
|Project Rationale and Linkage to Country/Regional Strategy||
Thailand has been successful in lowering poverty on a national level; however, income inequality remains high. There are considerable differences in the incidence of poverty across subnational regions and demographic groups. Poverty in Thailand is primarily a rural phenomenon, with 88.5% of the country's 5.3 million poor living in rural areas. The majority of the poor are concentrated in the Northeast (about 58%) and the North (26%) while Bangkok has almost no poverty (0.86%). One important cause of poverty in these regions and an important characteristic of inequality in Thailand is a lack of access to a variety of financial services which would help increase household income and provide a risk protection scheme against future contingencies.
While published data indicates that a large share of the population has access to financial services, there is considerable variation in the degree of access to financial services across income groups. Low income families (the poorest 40% households by income quintile) have access to a limited range of financial services and of lower quality services compared to the middle to high income families (the richest 60% of households by income quintile. For example, about 38% of low income families have only used one or two types of financial services, while another 16.0% of low income households do not use financial services at all. This compares with almost 80.0% of middle to high income families using three or more types of financial services. Similarly, almost half of low income households do not borrow compared to 27.0% of the middle to high income households. About 28.0% of low income households do not have access to savings products compared to 6.0% from the middle to high income groups.
Because of strong direct government involvement in the sector and a weak policy, regulatory and supervisory framework for financial inclusion, entry of other microfinance institutions has been complicated, difficult, and highly restricted. With very narrow options for service providers working under multiple regulators, private sector entry has been stifled, preventing necessary market competition, innovation and service expansion. The lack of private sector participation in microfinance has also limited efficiency and innovation in the sector. Due to the overabundance of inexpensive credit in certain areas and a low level of financial literacy, over-indebtedness and an increased dependence on moneylenders has grown in some regions. The absence of a system for consumer protection and a lack of financial education for low-income clients have further contributed to a low level of financial inclusion. Compared to other countries in the region, Thailand's microfinance industry lags far behind in terms of a policy, supervisory and regulatory framework supportive to sustainable microfinance operations based on market principles. An improved enabling environment with a strong policy, regulatory and supervisory framework with special focus on consumer protection, financial literacy and the expansion of insurance for the low-income market will contribute positively toward greater financial inclusion in Thailand.
|Impact||Improved access of the population to a diverse range of financial products and services|
|Description of Outcome||Improved regulatory and supervisory framework to support the development of inclusive finance|
|Progress Toward Outcome|
|Description of Project Outputs||
A comprehensive diagnostic of financial inclusion in Thailand completed
National strategy for financial inclusion approved
Strengthened capacity of the Bureau of Financial Inclusion Policy and Development (FIPD) to conduct its supervisory responsibility
Financial inclusion database in FIPD
Two priority tasks of implementation plan undertaken
|Status of Implementation Progress (Outputs, Activities, and Issues)||Microfinance Services PTY LTD., AUS consulting firm was engaged and commenced its services on March 2012. The consultants have completed the supply side assessment for financial inclusion and the demand side assessment as of August 2013. Based on the comprehensive assessment conducted under the Making Access to Finance Possible (MAP) inititiave, in cooperation with UNCDF, Government is finalizing its Masterplan for Financial Inclusion. Workshops to assist Government in developing an Implementation Plan and to begin implementation will focus on key topics including microinsurance and financial literacy/capability.|
|Summary of Environmental and Social Aspects|
|Stakeholder Communication, Participation, and Consultation|
|During Project Design||Consultations with a range of key stakeholders in the sector were held, including with relevant government agencies, (Bank of Thailand, Ministry of Finance/Fiscal Policy Office, Office of the Insurance Commission, Bank for Agriculture and Agricultural Cooperatives, Government Savings Bank), commerical financial service providers and support organizations (Kasikorn Bank, Thai Credit, National Credit Bureau), a geographic sample of community-level savings and credit groups, international organizations (World Bank, Agence Francaise de Developpement, Alliance for Financial Inclusion, the United Nations Capital Development Fund), and a wide range of NGOs and individuals working in microfinance. Stakeholders welcomed the development of a National Strategy for Financial Inclusion and a stronger, more cohesive regulatory framework for inclusive financial services for low-income people.|
|During Project Implementation||An initial stakeholder meeting was held 22 March 2012 to provide important input to the diagnostic study undertaken to understand the supply and demand for financial services for low-income and excluded populations in Thailand. Representing a broad range of stakeholders, 57 participants from 41 stakeholder organizations attended, with high-level representatives from government, non-profit, and private sectors, including the Bank of Thailand (BOT), the Office of Insurance Commission (OIC), the Japanese Embassy, the banking sector, the insurance sector and other relevant stakeholders. A second stakeholder meeting was held 17 September 2012 Stakeholder Meeting to present key preliminary findings from the supply side research conducted by the consultants (in close collaboration with the EA) and to present the methodology, content and timing of the demand side assessment, which will utilize the FinScope survey for the quantitative analysis and focus group discussions for the qualitative analysis. Seventy-two workshop participants included representatives from a range of 44 of government, non-profit, private sector, banking sector, the insurance sector, and other relevant stakeholders. A third Stakeholder Meeting to present full findings from supply and demand side assessments was held on August 6, 2013 with 112 participants from 34 different government ministries, private sector entities, academe, non-profits, and other development partners. The meeting presented the findings and recommendations from a comprehensive diagnostic study looking at the status of financial inclusion in Thailand. Focus was placed on overall findings and recommendations of the research covering the regulatory framework, microinsurance, supply of financial services, payments channels, financial literacy and consumer protection as well as detailed findings from the quantitative (6,000 household survey conducted by FinScope) and qualitative (240 households) demand side study.|
|Responsible ADB Officer||Kelly L. Hattel|
|Responsible ADB Department||Southeast Asia Department|
|Responsible ADB Division||Public Management, Financial Sector and Trade Division, SERD|
Fiscal Policy Office
|Concept Clearance||04 Jul 2011|
|Fact Finding||11 Jul 2011 to 26 Jul 2011|
|Approval||15 Dec 2011|
|Last Review Mission||-|
|Last PDS Update||31 Mar 2014|
|Approval||Signing Date||Effectivity Date||Closing|
|15 Dec 2011||30 Jan 2012||30 Jan 2012||28 Feb 2015||31 May 2015||-|
|Financing Plan/TA Utilization||Cumulative Disbursements|
|0.00||1,500,000.00||800,000.00||0.00||0.00||0.00||2,300,000.00||15 Dec 2011||1,320,413.97|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
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|Title||Document Type||Document Date|
|Development of a Strategic Framework for Financial Inclusion: Technical Assistance Completion Report||TA Completion Reports||May 2017|
|Financial Consumer Protection Assessment Report||Consultants' Reports||Oct 2013|
|Microfinance Regulation and Supervision Recommendations Report||Consultants' Reports||Oct 2013|
|Towards Inclusive Insurance in Thailand: An Analysis of the Market and Regulations||Consultants' Reports||Sep 2013|
|Thailand Financial Inclusion Synthesis Assessment Report||Consultants' Reports||Sep 2013|
|Financial Literacy Findings and Recommendations Report||Consultants' Reports||Aug 2013|
|Microfinance Supply-Side Assessment Report||Consultants' Reports||Aug 2013|
|Qualitative Demand-Side Research Report||Consultants' Reports||Jul 2013|
|Development of a Strategic Framework for Financial Inclusion||Technical Assistance Reports||Dec 2011|
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