Loans for farmland parcels
The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) will offer 20 billion baht in soft loans to farmer groups who pool their farmland into large parcels to create economies of scale.
The bank expects the loans to cover about 2,000 large parcels of land, said a BAAC source who requested anonymity.
The loan will be extended to each group of farmers with a cap of 10 million baht, the source said, adding that borrowers will shoulder an annual interest rate of a mere 0.01% while the government will absorb 3% for five years.
The interest rate subsidy is expected to cost the government around 3 billion baht.
In the meantime, the state-backed farm bank aims to provide 86 billion baht in new loans, excluding lending under the government’s policies for its fiscal 2017, running from April 1, 2017 to March 31, 2018.
The bank forecasts its loans outstanding for fiscal 2016 will amount to 1.28 trillion baht, up 7.2% from the previous year.
It aims for new deposits to be 50 billion baht for fiscal 2017 and non-performing loans (NPLs) to be under 4% of its total loans.
Net profit is expected to reach 7.19 billion baht in the 2017 financial year.
The BAAC has introduced several strategies to sharpen farmers’ competitive edge.
They include encouraging farmers towards sustainability and modernisation, being an organisation that has excellent database and high efficiency, providing services professionally and enhancing sustainability to society and the environment.
The bank has been always used by the government as a channel to provide subsidies to farmers.
The BAAC has played a role in several of the government’s subsidy schemes, including 8 billion baht in soft loans to encourage farmers in 35 provinces in the Central Plains to grow maize instead of rice, 19 billion baht in cash handouts to those earning up to 100,000 baht a year, and delaying the release of 10 million tonnes of new rice supply to the market to prevent a plunge in prices.
It is also one of three state-controlled banks that will put a combined 7 billion baht in the pockets of borrowers with good payment histories through a cashback scheme.
Under the scheme, the BAAC will return 30% of interest paid between Nov 1, 2016 and Oct 31, 2017 to 2.2 million debtors who make payments on time during the period.