The Government Savings Bank (GSB) chief on Sunday confirmed a loan to indirectly help farmers with an option to stop it if it turns out to be a setback for the bank.
Farmers at the Commerce Ministry take a break on Sunday before regrouping for a major rally against the caretaker government on Monday. (Photo by Pattarapong Chatpattarasill)
GSB president and chief executive Worawit Chailimpamontri said the bank's credit committee had approved 5 billion baht in an inter-bank loan to the Bank for Agriculture and Agricultural Cooperatives (BAAC) to make overdue payments to rice farmers under the rice-pledging scheme.
BACC will start payments on Monday, caretaker Prime Minister Yingluck Shinawatra said on Friday.
GSB has excess liquidity of 200 billion baht and has set aside 10% of it for other banks to borrow.
Both GSB and BACC are state-owned banks.
Mr Worawit said BACC could borrow up to 20 billion baht if needed. He said loaning excess cash to the BACC will not pose a risk for his bank due to the solid performance and track record of the agricultural institution.
BACC's non-performing loans stand at less than 4% and it had never delayed returning loans with interest to GSB, he added.
Mr Worawit refused to disclose the interest rate for the fresh loan, only saying that it will be returned in 30 days.
But he said the bank will consider stopping the financial lifeline to farmers through BACC as the deal is uncommitted.
GSB president and chief executive Worawit Chailimpamontri holds a press conference on Sunday to confirm inter-bank loan to the Bank of Agriculture and Agricultural Cooperatives. (Photo by Pornprom Satrabhaya)
The decision will rest on public sentiment, he said, adding that that would include whether customers withdraw their money from the bank.
The People's Democratic Reform Committee (PDRC) has warned banks of protests by anti-government demonstrators if they help the embattled caretaker government to pay farmers. They have also been warned of legal traps if the loans are interpreted as a financial burden on successive administrations.
The caretaker government has been struggling to find the 130 billion baht needed to pay the more than 1 million farmers who are still awaiting money from the rice scheme.
The caretaker government has reportedly secured 17 billion baht in loans from GSB.
GSB labour union head Likit Klinthanom said on Saturday the money is part of a total of 20 billion baht in loans that was approved by the board on Jan 8 with just over 2% annual interest.
Meanwhile, about 4,500 farmers from 20 provinces will stage a major rally in front of the Office of the Permanent Secretary for Defence on Monday to demand the government pay them the overdue money, Thai Farmers Network acting chairman Rawee Rungruang said.
Mr Rawee said the farmers' representatives would insist on meeting with Ms Yingluck only.
The farmers will give the government seven days to pay the debt, otherwise the rally will be escalated.
The rally will not be called off until the debt is fully paid, Mr Rawee said.
On the government's vow to get 5 billion baht for the first round of debt payment, he said the money would be enough for about 10,000 farmers. He believed this was only a government tactic to buy time.
In doing it this way it would take six months to one year for all the farmers to get paid, Mr Rawee said.
At least seven rice farmers have been found dead since the rice programme stalled. The latest victim was a farmer in Pathum Thani who hung himself on Saturday due to his growing debt after the government payments did not come.