Strengthening Specialized and Semi-Formal Financial Institutions to Support Financial Inclusion

The Project supports the Government of Thailand to 1) rationalize strategic directions of SFIs to ensure that they focus on their financial inclusion mandate of filling gaps in the financial system; 2) provide support to the expanded role of the secondary mortgage corporation in the area of mortgage insurance business; 3) undertake an in-depth review of cooperative-based financial services; 4) generate knowledge products related to financial inclusion in general.

Services provided to reach output 1 and 3 include:

Output 1: Strategic directions of specialized financial institutions rationalized with performance evaluation framework and parameters improved:

• Establishing the long-term vision (15-20 years) methodology framework for SFIs;
• Developing the performance evaluation framework for SFIs based upon the current State Enterprise Performance Appraisal (SEPA).
• Recommending parameters to assess the performance of SFIs, according to both commercial and public service criteria.
• Developing mechanism that facilitate the cost computations resulting from government credit support. This involves comprehensive risk assessments and recommended accounting templates for all expenses incurred in the activities performed according to the policy implementation.
• Examining and identifying supply gaps in the financial inclusion landscape to be served as a basis for the review of SFIs’ roles and strategic directions.
• Strengthening the capacity of the FPO and SFIs in appraising business directions and developing medium-term strategic business plans in accordance with the identified supply gaps.

Output 3: Regulatory and supervision capacity over cooperative sector strengthened:

• Recommending governance framework for cooperatives to ensure compliance and effective enforcement.
• Developing an early warning system and necessary mechanism to ensure that cooperative financial risks are well monitored.
• Recommending enhanced supervision structure of cooperatives such as tiered regulatory approach, as well as improved regulatory enforcement practices.
• Recommending measures and mechanisms to improve cooperative accounting standards.
• Recommending a framework to develop an integrated data management system for regulators and cooperatives.
• Strengthening the capacity of the Cooperative Promotion Department (CPD) and the Cooperative Auditing Department (CAD) in regulating and supervising cooperatives to be in line with the cooperative principles and the financial inclusion mandate.