The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is set to extend its existing relief package including rescheduling debt repayment periods by one year in order to ease the burden for unpaid farmers in the rice-pledging scheme.
It also plans to offer new credit lines to the farmers, said executive vice-president Somsak Kangteerawat.
The measures are expected to be announced in the next few days.
Mr Somsak said the BAAC will also scrap a 3% penalty rate for late payments for farmers eligible for debt rescheduling, and it will offer a credit line of up to 20% of the unpaid amount but not exceeding 50,000 baht each.
The BAAC is also considering raising the credit line, said Mr Somsak.
Some 1 million farmers who pledged paddy worth 100 billion baht to the government since the 2013-14 main crop began last Oct 1 are awaiting payment.
The BAAC, which handles payments to farmers, has run out of money to pay for the programme.
It has already paid about 50 billion baht to farmers who pledged their main crop paddy to the government. The main crop runs until Feb 28.
The caretaker government lacks the mandate to borrow money lest it risk breaching election law, while rice sales from state stockpiles are insufficient for pledging payments.
Mr Somsak said the BAAC has 5 billion baht available for farmers' borrowing.
The farmers have applied for only 1 billion baht in loans, as they do not want to pay interest at the bank's minimum retail rate of 7%.