BAAC, GSB told to increase efforts against informal lending
Concerned with the sharp rise in informal loans - those not extended by financial institutions - Finance Minister Apisak Tantivorawong has instructed the Bank for Agriculture and Agricultural Cooperatives (BAAC) and the Government Savings Bank (GSB) to in
They are to set up financial institutions in communities to help provide quick access to loans and educate farmers on how to manage their finances effectively.
With adverse impacts from drought, weak agricultural prices, and mounting debts, BAAC president Luck Wajananawat said farmers today had less capacity to repay debts, as evident by the rise in the bank’s non-performing loans (NPLs) to 6.02 per cent, or more than Bt60 billion.
The Finance Ministry believes it is necessary to educate borrowers on proper sources of funds, personal financial planning and calculation of interest costs.
The BAAC signed an agreement with the Bank of Thailand yesterday to educate four groups of youths and farmers, totalling 30,100 people, on effective personal financial planning.
In addition, the finance minister instructed the BAAC and GSB to set up financial institutions to extend quick loans in various communities in cooperation with local savings cooperatives and Village Funds. The BAAC has already set up such financial institutions in about 900 locations, with the goal of reaching 3,000 locations by 2017.
In the past, the BAAC has assisted clients in restructuring their debts to alleviate some of their informal-loan burdens.
The BAAC reported that its NPLs rose steadily from 3.38 per cent of total outstanding loans at the end of accounting year 2014 to 5.6 per cent in at the end of September 2015. It hopes to be able to reduce the current NPL figure of 6.02 per cent, or more than Bt60 billion, to 4 per cent, or between Bt3 billion and Bt4 billion, by the end of the accounting year 2015.
