Pilot projects for informal debt

The National Village and Urban Community Fund Office will start 200 pilot projects nationwide to help tackle informal debts.

Secretary-general Natee Klibthong said the project, which will collaborate with the Finance Ministry, the Bank for Agriculture and Agricultural Cooperatives and the Government Savings Bank, will start transferring informal debts to the fund — commonly known as the Village Fund — this month.

The scheme will see the government organise job training programmes for low-income earners to give them greater opportunities to increase their income over the long term.

Products made by informal debtors under the programme can be sold at 20,000 community shops and 2,000 Pracha Rat shops nationwide.

Mr Natee said a survey found 200,000 to 300,000 people nationwide carry informal debts owed to loan sharks. He did indicate the debt amount.

The office aims to launch the scheme to informal debtors nationwide next year, said Mr Natee.

In a related development, the National Village and Urban Community Fund Committee meeting chaired by Prime Minister’s Office Minister Suvit Maesincee yesterday approved 182 million baht for 187 urban funds to help low-income earners in Bangkok.

The funds will support the establishment of community shops and services, drinking water services and Pracha Rat shops.

In December 2015, the cabinet approved 3 billion baht from the Village Fund to help low-income earners in Bangkok.

Mr Natee said the committee expects to approve applications for 1,138 urban funds in Bangkok by the end of this year with a budget worth about 1.13 billion baht.

He said the committee also planned to ask the Bank f or Agriculture and Agricultural Cooperatives to provide soft loans to low-income earners for emergency cases.

The Village Fund, which has operated for 16 years, has helped enable low-earners to generate more income, with a multiplier effect on the economy, said Mr Natee. Over the past 10 years, the fund has helped generate an additional 50 billion baht worth of income, he said.

The fund was initiated by the Thaksin Shinawatra government with 180 billion baht allocated to it.

The government has approved a combined 50-billion-baht budget for the Village Fund in the past three years. In late 2015 it approved 60 billion baht worth of soft loans for the funds.

Mr Natee believes certain Village Funds will become strong enough to become community banks and no longer need additional funding from the government. There are 2,560 funds with 40-60 billion baht that have the potential to do so.