BAAC expects 85% of farmers to join debt plan

BAAC expects 85% of farmers to join debt plan

Farmers harvest rice in a paddy filed in Nakhon Ratchasima in July this year. (Photo: Prasit Tangprasert)
Farmers harvest rice in a paddy filed in Nakhon Ratchasima in July this year. (Photo: Prasit Tangprasert)

The Bank for Agriculture and Agricultural Cooperatives (BAAC) anticipates roughly 85% of the 2 million eligible farmers will participate in the government's debt suspension programme, says president Chatchai Sirilai.

The scheme is one of the initial acts of the Pheu Thai-led government.

Mr Chatchai said the 15% of farmers expected to avoid the programme can be attributed to some loan contracts requiring a guarantor, though the guarantor may be deceased without a successor.

In some cases, the guarantor and borrower may live in different provinces, and BAAC regulations require contracts to be signed by both parties at the same time, he said.

For these cases, the BAAC can amend the regulation, allowing the guarantor and borrower to sign the contract on the same day in different locations, said Mr Chatchai.

Application for the debt moratorium was scheduled to end in December, but the bank extended the period until the end of January. Some 1.02 million farmers, representing 51% of the target, have entered the debt suspension programme, he said.

On Sept 26, the cabinet approved a three-year debt moratorium covering both principal and interest for farmers who owe a maximum of 300,000 baht across all their loan contracts with the BAAC. The government shoulders the burden for interest payments to state financial institutions at a rate of 4.50%.

Mr Chatchai also referred to measures to help Thai workers returning from Israel.

The bank, together with the Government Savings Bank (GSB), was instructed by the government to provide low-interest loans to returnees for career development, with a total budget of 2 billion baht split equally between the banks.

The maximum loan amount is 150,000 baht, with an interest rate of 1% and repayment period of up to 20 years. The government shoulders the burden for interest payments to the BAAC and GSB at a rate of 2%.

The BAAC also plans to offer a relief loan programme for workers returning from Israel with a credit limit of 1.5 billion baht, he said.

This is the bank's own initiative, meaning the BAAC will not receive any interest compensation from the government, said Mr Chatchai.

The BAAC is drafting a proposal for its board for the loan programme, which is expected to have an interest rate less than its normal rate, he said.

For Thai workers killed in the conflict in Israel, the bank will forgive their entire debt for one loan contract. If a deceased worker has more than one loan contract with the bank, the interest rate will be reduced to 2.5%, said Mr Chatchai.

The BAAC recently issued a two-year term savings lottery worth 100 billion baht with an interest rate of 0.835% to raise funds for lending. Priced at 2,000 baht per unit, buyers receive interest of 35 baht per unit and have a chance to win a first prize worth 60 million baht 24 times.

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