The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) will use its excess liquidity to advance payments for the rice pledging scheme if the government falls short of its target in selling rice stockpiles.
The bank, which is the funding source for the scheme, has excess liquidity worth 227 billion baht, representing 21.86% of its outstanding deposits and three times above the Bank of Thailand's requirement, president Luck Vajananawat said.
The Commerce Ministry recently said it aimed to release 6-7 million tonnes of rice in stockpiles under the pledging scheme this year.
Mr Luck said the Finance Ministry, however, will shoulder all financial costs to be incurred from using the bank's surplus liquidity for advance payment.
The Commerce Ministry estimates that it will raise 113 billion baht from selling rice from April to December to fund the scheme for the second crop.
The ministry aims to raise about 220 billion baht this year from releasing rice in the government's stockpile to pay BAAC, Mr Luck said, adding that the ministry had already paid 102 billion baht to the bank as of the end of March.
About 1.75 million farmers with 11.45 million tonnes of rice are expected to participate in the pledging scheme for this year's main crop, well below the target of 15 million tonnes due to drought.
The government has paid 184 billion baht for the scheme, far below the target of 240 billion.
For this year's second crop, the government aims to buy 7 million tonnes of rice worth 105 billion baht.
Separately, Mr Luck said BAAC plans to mobilise more funds from those who live in Bangkok to extend loans to rural residents.
The bank will open 20 new branches in Bangkok this year to take its number in the capital to 50.
BAAC aims for 8% growth of 85 billion baht in lending for the fiscal year that started on April 1.
The bank also expects the same percentage growth of 8% in deposits or 82 billion baht.
Mr Luck said the bank plans that its number of farmer cards will hit its target of 4 million this year, up from 2.38 million, to comply with the government's policy.