The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) aims to help the 30% of low-income earners under the state welfare scheme who apply for job training programmes to rise above the poverty line.
Under the second phase of the government's welfare and subsidy scheme, the BAAC is providing job training and loans to develop careers and boost income. The bank also provides personalised planning for each registrant of the welfare scheme to help them breach the poverty line.
The bank expects enrolment will reach 4 million by the time registration closes at the end of April, and it plans to construct personalised plans for career development and debt reduction for 80% of the registrants by May, president Apirom Sukprasert told the Bangkok Post in an interview.
The bank created personalised plans for 638,697 registrants as of March 23. For career development, 3.58 million people have registered.
Some 445,000 of the 638,697 have expressed the intention to switch to growing other crops, while 36,000 wanted to be employees or self-employed workers. The remainder are over age 60 and want to apply for farming under the late King's sufficiency economy philosophy.
The second phase of the government's welfare and subsidy scheme is aimed at comprehensively and sustainably addressing the root causes of poverty by letting the BAAC set up a customised plan for each registrant to boost income through the career development scheme and alleviate debt.
Most who have signed up for aid through the BAAC are farmers.
Last August the cabinet approved the first phase of the aid package, worth 41.9 billion baht, for 11.4 million low-income earners -- 5.3 million of whom have income below the poverty line of 30,000 baht a year.
Mr Apirom says the bank is tallying the amount of underground loans owed by recipients of the welfare and subsidy scheme.
The BAAC targets to offer loans worth 45 billion baht under the so-called XYZ loan scheme to 384,000 low-income recipients who want to switch to plant other crops but need to gather in community groups to apply for cheap loans at 0.01% interest.
Each farming community is eligible to seek up to 10 million baht in loans from the BAAC.
To lower the BAAC's risk on XYZ loan extensions to these farming communities, the bank will oversee farmers' money withdrawals and repayment, he said.
The bank will also allot 20 billion baht for career development loans to 400,000 registrants in the second phase. Each recipient is entitled to a loan of up to 50,000 baht, with no interest rate in the first six months and the minimum retail rate (MRR) for the remaining 2½ years.
The BAAC will use 2,401 farming small and medium-sized enterprises (SMEs) and 1,368 agricultural cooperatives with potential to add value to farm products as part of the mechanism to boost income to farmers under the government's agricultural sector reform plan.
Mr Apirom said that the state-backed farm bank is tallying the total amount of underground loans owed by recipients of the government's welfare and subsidy scheme under the first phase, and is gathering additional details, including the names of lenders.
During the registration for the first phase, 512,502 recipients reported that they owed underground loans worth 31.2 billion baht in total.
"The bank is offering [scheme recipients] loans to refinance their underground loans. The BAAC, at the same time, will restructure bank debt for the scheme's recipients," he said.
According to BAAC data, 815,480 recipients owe a combined debt of 184 billion baht to the bank. Of the total debtors, 209,820 with a total debt of 101.7 billion baht have more than 300,000 baht debt each and the remainder owe up to 300,000 each, with total debt of 82.7 billion.
Under the debt restructure scheme, payment of interest incurred ahead of the debt restructuring will be suspended while debtors will be offered a two-year grace period on repaying the principal.
Half of their debt will be rescheduled to the seven-year payment period with new interest rates, and half of interest liabilities incurred from the restructuring process will be waived if they can pay down the principal for a certain period.
The bank will charge MRR for those with debt over 300,000 baht and waive interest for two years for those with debt up to 300,000. The remaining debt and interest will also be restructured later.
Separately, Mr Apirom said the bank's board of directors have appointed the bank to seek ways to cut the interest rates charged to farmers.
The bank's interest rate determinants comprise funding and operating costs, and risks.
Risk-based pricing is a method that the bank can adopt to help cut interest rates to overall borrowers, he said.
The bank's cost of funding has fallen to 1.7% from 1.9% in its last financial year ending March 31, 2018, following the launch of cheaper cost-savings products, he said, noting that the 1.7% funding costs have not taken into account a surcharge of 0.47% of deposits to a fund on development of specialised financial institutions.
The BAAC is targeting new deposits of 58 billion baht for this financial year, of which 15 billion will be deposited by farmers.
Under its five-year plan starting from 2017, the BAAC aims to be a rural universal bank, a financial institution with a full range of financial products to serve all customers in agricultural supply chain by 2021.
To move toward being a sustainable bank, the BAAC's board has approved the change in key performance indicator calculation formula to 50% from operating performance, 47% from other performances and 3% from social and environment aspects.
The bank plans to adopt a carbon offset scheme this year to reduce its carbon footprint.