BAAC plans new term deposits to raise funds for rice pledging

Arun Lertwilai, executive vice president of the BAAC, yesterday said the bank will launch savings product offering annual returns of 3.7 to 5 per cent.

The bank aims to mobilise Bt20 billion from the product and it is a part of the bank's efforts to raise more funds for financing the rice-pledging scheme, he said.

The bank is targeting civil servants who will be retiring by the end of this month and others aged 55 and above, he said.

The minimum deposit is Bt100,000 and the maximum is Bt10 million. The four-year time deposit will be from October 1 this year to September 30, 2015. The interest rate is 3.7 per cent in the first year, 3.9 per cent in the second year and 4 per cent in the third year. In the fourth year, the rate would be 4.4 per cent in the first half of the year and 5 per cent in the second half. The accrued interest is exempted from tax.

Depositors have to invest the money between October 3 and November 30 this year. Those who withdraw money before the end of the deposit term will be charged 1 per cent of the principal amount.

Currently, deposits by senior people with the bank amount to Bt80.68 billion, while total deposits are Bt716.67 billion.

The bank also plans to issue a new savings product in November. The new deposit is expected to raise more than Bt40 billion, he said.

The government estimates that it may need to borrow from the bank and other state banks about Bt400 billion to buy up 25 million tonnes of rice. The government will buy rice at above market price - Bt15,000 per tonne of white rice and Bt25,000 per tonne of fragrant rice. The rice-subsidy scheme will start on October 7.

Along with the rice-pledging scheme, the BAAC will issue credit cards to farmers, said Arun. Pilot projects would be launched in five provinces - Chiang Mai, Udon Thani, Ayutthaya, Saraburi and Nakhon Ratchasima. In the first stage, 5,000 cards will be issued.

Farmers can use the card to buy rice seeds, fertiliser and pesticides from shops that work with the bank. There are about 3,000 shops nationwide. Each farmer will get credit of up to 70 per cent of his estimated rice sale.

Farmers need not pay interest on the credit card. They would only need to pay back the principal amount after they sell their rice. The government will offer the farmers credit card interest rate subsidy.

"The bank has no experience in the credit-card business, so we need to launch the pilot project first before issuing more credit cards - about 1 million in the first year," he added.

Offering the credit-card facility nationwide is expected to cost the bank about Bt500 million.