BAAC to convert loan cards

BAAC to convert loan cards

The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) will upgrade the features of some of its loan cards for farmers to credit cards within one year.

President Luck Wajananawat said 10% of cardholders will qualify for credit card use, while credit card operations will be under Bank of Thailand supervision.

The BAAC has issued 4.13 million cards to farmers with a combined credit line 63.2 billion baht.

The cards, a key Pheu Thai campaign pledge, offer a credit line for up to 70% of the production value grown by the farmer, with farmers able to pay for fertiliser, seeds, agricultural machinery and pesticides at participating suppliers using the cards.

The cards allow farmers to access to capital at a cheaper rate than loan sharks. The BAAC charges an interest rate of 7% per year for overdue amounts and offers a five-month interest-free period.

The bank requires farmers pay their outstanding debts in full within the time frame of their farming operation, typically one year. A farmer who fails to meet the payment deadline three times is deemed a non-performing debtor.

As of Sept 30, the outstanding balance for the farmer cards was 17 billion baht, with non-performing loans at 1.9%.

Card spending, currently at 120 million baht a day, will rise to 200 million a day by year-end. Each farmer spends 25,000 baht on average via the cards.

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