The Government Savings Bank (GSB) has decided to suspend further lending to the Bank for Agriculture and Agricultural Cooperatives (BAAC) after experiencing a 30-billion-baht deposit run amid concerns the loan is being used to pay for the loss-ridden rice-pledging scheme.
Customers storm into the Hat Yai branch of the Government Savings Bank in Songkhla to withdraw cash on Monday. Wealthier people taking out large sums left with cash in their bags while those withdrawing small amounts got cheques. VICHAYANT BOONCHOTE
"The GSB board will discuss the matter [today] as the issue affects the bank," president Worawit Chailimpamontri said yesterday.
He assured that the GSB would not lend more money to the BAAC and said the BAAC should return the 5-billion-baht loan that the GSB has already transferred to it if it did not use the money.
Customers yesterday withdrew 30 billion baht from GSB branches nationwide against new deposits of 10 billion baht.
The 20-billion-baht deficit is unusually high after an extended weekend when normally only about 7 billion baht would be withdrawn.
According to Mr Worawit, most withdrawals happened in Bangkok, nearby provinces and southern provinces. Deposits in greater Bangkok form up to 40% of total deposits at the GSB.
Mr Worawit admitted that clients in Bangkok were sensitive to the reports relating to the rice-pledging scheme and most customers who withdrew the money were small-scale clients.
Mr Worawit said each GSB branch increased cash levels to cope with the massive withdrawals.
"We did not underestimate the situation but we may have wrongly estimated the impacts because we did not expect online speculation would have a real effect on the bank," Mr Worawit said.
Cash withdrawal problems happened mainly at GSB branches in department stores, which do not have vaults to keep large sums of cash.
He also explained that the 5-billion-baht loan to the BAAC was a normal inter-bank transaction and the GSB did not know how the BAAC would spend the sum.
He stressed that the GSB was guaranteed by the government.
Last year, its excess liquidity amounted to 200 billion baht, accounting for 20% of its total deposits, while the Bank of Thailand requires only 6%.
Non-performing loans at the GSB formed only 1.14% and it posted a net profit of 22 billion baht last year.
A large number of clients yesterday withdrew their savings and closed their accounts with the GSB in protest against the government's plan to use depositors’ money to pay for its pledged rice.
The government has defaulted on about 1 million farmers who have pledged their rice with the government for several months and the outstanding sum stands at 130 billion baht.
At least seven rice growers have committed suicide since the pledging payments stalled.
The Chamchuri Square branch of the GSB in Bangkok ran out of cash about noon yesterday. Staff at the branch tried to convince clients to accept cheques, exempting them from fees instead.
Clients were frustrated with the offer as the branch could issue only four cheques per hour. Some clients opted to pay higher fees to have their money transferred to other banks.
A woman who wanted to withdraw said she would file a complaint with police unless the branch gave her cash.
"You have your rules and I also have mine," she said.
"I withdrew the GSB lottery deposit worth 100,000 baht and closed all accounts with the GSB," said a customer called Suchart, a 50-year-old charity worker. "I want to show that I am dissatisfied with what the government does to people and rice growers."
Mr Suchart said he sympathised with farmers who worked hard to take care of their families but were deceived by the government.
He also said that it was not right for the government to use depositors’ money to support its rice-pledging scheme.
"The government took farmers’ rice, so it must sell the rice and repay them," Mr Suchart said. "It is not right to take our savings that have nothing to do with the farmers."
Apaporn Ratanakot, a GSB executive who supervises branches in Trang and Satun, said she was worried about the unusually high number of withdrawals.
She said her staff tried to tell clients that the inter-bank lending came from the excessive liquidity of the GSB and did not dip into clients' savings.
Meanwhile, Tawatchai Thaikyo, deputy permanent secretary for justice, urged all parties to help rice farmers affected by the rice-pledging scheme.
Mr Tawatchai said he had moved his money from other banks to the GSB, particularly to help the farmers.
He said the Pheu Thai Party-led caretaker government of Yingluck Shinawatra was not in any position to help the rice farmers for the time being and the anti-government People’s Democratic Reform Committee, which forced the House dissolution late last year, was also unable to do anything.
He also said that inter-bank lending was a normal solution that could help the farmers whom the government owed rice debts and that banks which lent to support the rice-pledging scheme would only profit because the government would never fail its creditors.