BAAC to refuel loan scheme

Another B50bn eyed to help farming SMEs

The state-owned Bank for Agricultural and Agricultural Cooperatives (BAAC) plans to offer a new batch of the One Tambon One Farming SME loan scheme worth 50 billion baht after the first 72-billionbaht batch is set to be fully drawn down by next month.

The application period for the additional loans runs from April this year to March 31, 2021, said president Apirom Sukprasert.

The interest rate for the new lot of seven-year loans will be the same at 4% for the first three years, with the bank to determine the rate for the remaining loan term. The maximum loan amount will be doubled to 20 million baht per borrower, he said.

The SME farm loans are meant to help farmers upgrade the supply chain and drive the local economy.

The scheme is in line with the bank’s goal to enlarge the ratio of agricultural SME lending to 40% of loans outstanding by 2020.

Agricultural SME lending accounted for a mere 3% of the BAAC’s total loans at the end of its last financial year, which ended March 31, 2017.

The government aims to move farmers upstream in the production process, helping them make value-added products to sustainably boost their income.

BAAC has already extended 60 billion baht in loans under the scheme to 60,000 borrowers since the project began in 2015, of which 1,000 are agricultural cooperatives, he said. Of those borrowers, 100 have been offered the 10-million-baht ceiling.

The scheme is further intended to help SME farmers expand abroad, including organic rice producers in Chiang Rai province.

For the first 10 months of the bank’s financial year, BAAC lent 60 billion baht, compared with the annual target of 86 billion, he said.

The bank’s non-performing loans are expected to fall to 4% of the total by the end of this financial year, down from 5.1% at present, on the back of improving farm product prices, particularly for rice paddy, said Mr Apirom.

He said BAAC aims to provide 93 billion baht in loans for its 2018 financial year.

The state-backed farm bank is also offering a 5-billion-baht green credit to promote organic farming or food certified to be safe, alternative energy, environmental conservation, culture and community.

The bank’s rate for individual borrowers is one percentage point below the minimum retail rate, equivalent to 6%, while community enterprises are charged at the minimum lending rate minus 0.5 percentage points, equivalent to 4.5%.

The extent of t he credit line is project-dependent.