BAAC budgets Bt10 bn to pay down farmers' informal debts
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The Bank for Agriculture and Agricultural Cooperatives (BAAC) has allocated Bt25 billion to support farmers in two projects: to free them from debt owed to loan sharks, and to back rubber agriculture.
Of the total, Bt10 billion will fund credit lines for farmers to help them repay high-interest informal loans between September 1, 2014, and September 30, 2015.
BAAC senior executive vice president Somsak Kangteerawat said participants in this programme must prove to the bank that the informal loans they obtained before September 1 are a heavy financial burden.
The BAAC has set Bt100,000 as the limit for each loan applicant at 12 per cent interest per annum, with maximum loan period of 10 years, or 12 years for special cases. A fine of 3 per cent interest per annum will be added if the borrowers default on their repayments without justified reasons. Borrowers can place assets such as properties or bank deposits as security, or a personal guarantee, as loan collateral.
The BAAC will also provide a free Bt100,000 loan-insurance policy for the duration of the loan period.
It will also offer free courses on jobs and occupations, personal savings, household expenses and revenue accounting to help the loan applicants manage their personal finances to avoid falling into heavy debt again, he said.
The BAAC targets this campaign to support up to 160,000 farmers indebted to loan sharks.
According to survey by the Thai Chamber of Commerce, of the household debt racked up since 2006, 49.1 per cent is from loan sharks or other underground sources, and the rest from banks.
Special rate
The BAAC board also approved a budget of Bt15 billion to support rubber agriculture. Of that, Bt10 billion will fund loans to state and private-sector agencies involved in the rubber trade, including research, development and manufacture, to buy rubber from farmers. The BAAC will offer a special interest rate of 4 per cent on these loans, of which most will be covered by the government, resulting in a rate of only 1 per cent for the participants in the programme.
The remaining Bt5 billion will support these agricultural agencies’ investment in rubber factories.
The BAAC expects this programme to contribute to the absorption of at least 200,000 tonnes of rubber from farmers this season.
