BAAC pledges to solidify its financial status

The Bank for Agriculture and Agricultural Cooperatives (BAAC) has committed to solidifying its financial status, aiming to provide continued support to farmers and cap its non-performing loans (NPLs) at 4% this year.

BAAC president Chatchai Sirilai said for the bank’s financial year ending March 31, 2025, maintaining NPLs at or below 4% should ensure the bank’s financial stability.

In the previous financial year, ending March 31, 2024, the bank’s NPLs tallied around 5% of outstanding loans, while the rate was 7.68% the previous year.

Mr Chatchai said being an agricultural bank means the focus is not on business expansion, but rather ensuring stability to provide continuous support to farmers.

Once the bank becomes financially stabilised, he said there is an opportunity to extend credit to larger agricultural enterprises, aligning with the bank’s goal to broaden its market share.

“If we can gain a greater credit share among large-scale entrepreneurs, such entrepreneurs could serve as the vanguard of the agricultural sector. They would be the ones leading agricultural produce into their own factories,” he said.

“For instance, if the BAAC extends credit to a canned pineapple factory, we may seek collaboration with entrepreneurs to increase their purchases

‘‘ Being an agricultural bank means the focus is not on business expansion, but rather ensuring stability to provide continuous support to farmers.

CHATCHAI SIRILAI President, Bank for Agriculture and Agricultural Cooperatives

of pineapple from farmers who are customers of the bank.”

According to Mr Chatchai, the bank’s stability not only involves keeping NPLs at an appropriate level and stabilised rates but also systematic management to avoid surprises.

Concerning the adoption of the new accounting standard, the Thai Financial Reporting Standards 9 or TFRS9, Mr Chatchai said for the state’s specialised financial institutions (SFIs) in 2025, each state-owned bank faces varying limitations.

For banks overseeing vulnerable customer groups, the implementation of the new accounting standard may impact the financial policies agreed upon with the Finance Ministry, he said.

According to Mr Chatchai, SFIs have approached the ministry to request flexibility in implementing the new accounting standard.

Nevertheless, SFIs are committed to conducting parallel accounting or dual pillars between the current accounting system and the system based on the new accounting standard, he said, adding each SFI is likely to have gaps between the old and new accounts, and banks with a higher public service account (PSA), which guarantees compensation to projects carried out by the government in case of loss, will face larger gaps than those with a lower PSA.

Regarding the debt suspension programme for small-scale farmers according to government policy, Mr Chatchai said the debt suspension programme for farmers this time differs from previous ones because, in this instance, the government will bear the interest burden on behalf of participating farmers.

In the previous debt suspension programmes, the government did not assume the burden of interest payments, allowing farmers only to suspend principal and interest payments. Consequently, after the suspension period, the debt burden for farmers did not decrease.

However, in this current debt suspension programme, he said, if farmers do not have overdue interest and stay in the debt suspension period, they will be allowed to bring money to repay the debt to the BAAC.

The entire repayment will be deducted from the principal. This results in a reduction of farmers’ principal amount after the end of the suspension period, he said.