BAAC goes to cabinet for capital

A proposal by the Bank for Agriculture and Agricultural Cooperatives (BAAC) to raise registered capital by 6 billion baht this year is scheduled to go before the cabinet tomorrow.

Deputy Prime Minister Somkid Jatusripitak said the capital injection will allow the BAAC to offer more loans, notably for smart farming and in support of the government’s policy for projects aimed at reducing income disparity.

The BAAC’s new capital will be available from the Specialized Financial Institutions Fund (SFIF), to which all special financial institutions make contributions based on their deposits. The state-owned bank has registered capital of 56 billion baht.

Mr Somkid said the BAAC was told to team up with the Industry Ministry’s Industrial Promotion Department and the Tourism Authority of Thailand to develop 300,000 smart farmers within three years and promote community tourism, in part to tackle poverty in rural areas, where 30 million people live.

BAAC president Apirom Sukprasert said the bank’s capital increase plan is a part of the framework to increase authorised capital by a total of 20 billion baht in five years (2020-24).

Mr Apirom said he already informed the prime minister about the recapitalisation plan on Friday.

He said the bank needs more capital this year to extend loans to build additional water resources to deal with drought and develop smart farmers and community businesses.

“The bank’s loans outstanding total 1.5 trillion baht,” Mr Apirom said. “New capital will help the bank extend loans to cover government policies.”

Once approved, the bank will see registered capital increase to 62 billion baht.

The BAAC’s capital adequacy ratio is relatively high at 11.7%, well above the Bank of Thailand’s minimum requirement of 8.5%.