In the past, Thailand did not have a clear deposit protection system. The protection of depositors depended on the government’s policy in each situation. Until the severe financial crisis in 1997, the Cabinet announced full protection for all depositors and creditors, with the Financial Institutions Development Fund (FIDF) undertaking this responsibility. This measure created a significant burden on the country, requiring the government to issue bonds to compensate for losses—effectively using a large amount of taxpayers’ money to support the financial sector.

By 2003, Thailand’s economic and financial systems had begun to recover and stabilize. The Bank of Thailand (BOT) subsequently proposed to the Ministry of Finance that the implementation of the draft legislation and the establishment of a deposit protection agency should commence around mid‑2004. However, because the law directly affected the public—particularly depositors—the provisions were examined with great care. Eventually, the draft Deposit Protection Agency Act was approved by the National Legislative Assembly on 19 December 2007 and published in the Royal Thai Government Gazette on 13 February 2008. It came into force 180 days after publication, on 11 August 2008, which is recognized as the official founding date of the Deposit Protection Agency (DPA).

The Deposit Protection Agency was established under the Deposit Protection Agency Act B.E. 2551 (2008) and has been in effect since 11 August 2008. Its key principle is to ensure that depositors—particularly small retail depositors, who form the majority of depositors in the system—receive protected funds promptly in the event that a financial institution under the Deposit Protection Act has its license revoked.

Setting a clear coverage limit helps reduce panic among the public, eliminating the need for depositors to rush to withdraw their funds, especially when news arises about a financial institution facing difficulties. Such mass withdrawals could otherwise worsen liquidity issues and trigger broader systemic problems.