The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is facing tepid loan demand, with a meagre 4.17 billion baht in loans extended for the three months through June.
Demand for loans from farmers was weak as they were reluctant to invest amid ebbing purchasing power and the sluggish economy, said Somkiat Kimawaha, executive vice-president of BAAC.
Normally, the BAAC lends 10 billion baht from April to June, he said.
The bank's loan demand is expected to improve following the government's stimulus package, which should bolster consumer spending, said Mr Somkiat.
The BAAC aims for 95 billion baht in lending this financial year, starting from April 1.
He said the bank plans to lend 44 billion baht through SME farm loan, 38 billion via the smart farmer loan scheme and 10 billion to retail farmers.
The BAAC has extended 55 billion baht through relaxed loan conditions for farmers affected by both the recent drought and floods.
Under the three-year lending scheme, interest was waived for the first six months and the bank charges borrowers the minimum retail rate (MRR), which stands at 6.875% per year for the remaining repayment period, said BAAC's president Apirom Sukprasert.
Each flood victim is eligible for up to 50,000 baht in loans.
If a flood destroys debtors' farmland or homes, the loan maturity is extended to 15 years and the loan ceiling is increased to 500,000 baht per borrower.
Tropical storm Podul has ravaged several provinces and resulted in widespread flooding in 13 provinces in the North and Northeast, with Khon Kaen province hit the hardest.