Cabinet approves Bt10-bn capital increase for BAAC
The Cabinet has given the green light for a Bt10-billion capital increase by the Bank for Agriculture and Agricultural Cooperatives (BAAC) to Bt60 billion as suggested by the Finance Ministry.
Deputy Government Spokesman Pakdiharn Himathongkam said the capital increase at BAAC was intended to support the bank’s mission to support rural development, with a focus on creating opportunities for the agricultural and rural sectors to access capital.
The bank plans to extend loans for business expansion and to improve liquidity in the economic system and local economies, and to reduce the financial burden on local farmers over a five-year period from 2012 to 2016, the spokesman said.
He said the BAAC would increase lending by about Bt500 billion over the period, or Bt100 billion annually, to increase liquidity in the economy, especially in rural areas. The bank is also required to support the government’s policies, including the debt-moratorium project for lower-income farmers who have loans not exceeding Bt500,000. Such a measure would allow individual farmers to reallocate money to improve production efficiency.
The debt moratorium will amount to about 34 per cent of total loans.
At the same time, the new lending will create financial stability for the BAAC itself. It is assumed that the BAAC will have Bt118 billion of newly approved loans in 2016 and about Bt1.2 trillion of outstanding loans, and Bt6.9 billion in net profit. Net profit is expected to reach Bt4.5 billion this year.
