Cheap loan extensions by state-run banks to low-income earners are at the heart of new short-term stimulus measures aimed at countering slowing growth and revitalising the economy.
The government will subsidise some interest costs of state-run banks participating in the scheme, finance permanent secretary Rungson Sriworasat said.
On his second day on the job, newly appointed Finance Minister Apisak Tantivorawong discussed the new financial assistance plan with senior ministry officials.
Deputy Prime Minister Somkid Jatusripitak told the media the new economic stimulus measure would be submitted for cabinet approval next week.
Domestic investment is a crucial engine for pushing the country's economic growth amid export contraction, he said.
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The Thai economy slowed to 2.8% growth in the second quarter, down from 3% in the first quarter. In the first half it grew by 2.9% year-on-year, up from 0.2% growth in the first half of 2014 and 1.6% growth in the second half.
The National Economic and Social Development Board recently cut its full-year GDP growth forecast to 3-4% from between 3.5% and 4.5% and lowered its export growth view to 0.2% from 3.5%.
The cooling economy in China and unexpected factors such as last week's bomb attack in Bangkok and the severity of the drought have added pressure to Thai economic health.
Concern is growing that the 2015 economic growth target of 3% may not be achievable.
Rungson: Interest costs to be subsidised
A Finance Ministry source said state-run banks would be instructed to lend low-interest loans to grass-roots people nationwide to boost their financial liquidity and create jobs, as such citizens are in a cash squeeze and cannot access formal financial sources.
The Finance Ministry has been meeting with the Government Savings Bank and the Bank for Agriculture and Agricultural Cooperatives (BAAC) to discuss cutting their interest rates for the 40 billion baht in loans to Village Funds to 3% from 5%.
If the banks agree, the loans will be charged at less than the 5% rate of the 15 billion baht in policy loans extended by the Small and Medium Enterprise Development Bank of Thailand.
The Fiscal Policy Office has been meeting with state-owned banks to discuss how they can help grass-roots people and will submit proposals to Mr Apisak today, the source said.
Accelerating public investment in small projects such as water and road construction will be part of the stimulus measures, the source said, adding that cash giveaways would not be included.
The leftover central budget and undisbursed investment budget for fiscal 2015, amounting to a combined 7.91 billion baht, will be used to finance the new measures, the source said.
The National Legislative Assembly has passed a proposal by the Budget Bureau that would transfer the undisbursed investment budget to the central budget, only the second time in the bureau's 51-year history that it has tried such a ploy.
State agencies that fail to draw down their budget as scheduled usually ask the Finance Ministry to carry over the funds to the next fiscal year. The new measure takes effect today.
Meanwhile, BAAC president Luck Wajananawat suggested that financial aid for farmers involve a flexible loan policy to put money in farmers' pockets.
Improving irrigation and promoting the growth of economic crops are also important, he said.