This in turn enables banks to differentiate good debtors from more risky ones, and charge them commensurate to their risk profiles. In view of bank oversight, the Bank of Thailand has reoriented its focus on supervisory framework away from solo-basis transaction-testing analysis, towards risk-based supervision on consolidated basis. To fulfill this objective, we have already issued guidelines on all key risk categories and undertaken internal reform and capacity building to meet the challenge posed by comprehensive risk-based supervision. An example in this area is the development of examiners’ manuals that are regularly revised to ensure consistently high standards of supervision. 4. Going forward  Ladies and gentlemen, in the next few years, Thailand anticipates both opportunities and threats in the retail banking sector for existing banks in the light of the implementation of the Financial Sector Master Plan. As regards the focus of regulators, more attention will be given to watchful monitoring of the use of credit cards, monitoring of non-bank credit institutions, and observance of governance by market participants. The changing landscape of financial system to be brought about by the Financial Sector Master Plan will create opportunities for present market participants that have the courage to explore the niche and capability to satisfy the specialized needs of this group of customers. They come in the form of a new type of bank license - retail bank and other incentives. The tier1 capital requirement of 250 million baht for retail banks will be conducive to their specialized lending to retail customers.
In terms of composition of banking retail credit, housing credit represents almost two-thirds, reflecting the household’s holding of assets mainly in the form of housing real estate - a common feature prevalent in Asia. Credit cards and commercial credits take up 7.2 and 6 percent of total retail credit, respectively, while the remaining 21 percent are credit for other consumption purposes such as electrical appliance, education and so on. Among all types of retail credit, there are three fast growing segments in the past few years that deserve our attention. First, housing credits with accelerating growth. Second, credit card advance with tapering growths close to 40 percent. And third, automobile hire purchase with record growths of well above 50 percent. The booms in these segments commonly rest on the strong economic recovery, coupled with solid performance of the stock exchange - after all the Stock Exchange of Thailand recorded one of the best performing bourse in 2003. The government spending programs such as the village fund has fuelled further consumption, especially at the grass-root level, to ensure firm recovery. Moreover, against the backdrop of persistently low interest rate environment, consumers find it easier to part with their money acquired from liability assumption. This is particularly relevant for the build-up of debt in housing and automobile segments by households that simply mirrors an accumulation of assets on the other side of their balance sheet.