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22 June, 2009

 

BAAC to Start a New Microfinance Program


The Ministry of Finance has instructed the Bank for Agriculture and Agricultural Co-operatives (BAAC) to start a new microfinance program. Currently, the Bank is an extension of the government and offers subsidized interest rates to farmers. According to BangkokBizNews.com, the bank must now start thinking as a business and operate as one. Government officials recognize that subsidizes loans are not as effective as they once thought. This is a significant shift in direction for the bank. Farmers have become accustomed to receiving low-interest loans. In a business model, the new BAAC program will be forced to raise interest rates in order to be able to pay for its operations. This change will likely help the microfinance sector in Thailand as a whole. With a large and subsidized loan program, other agencies could not compete. By leveling the playing field, more groups will be attracted to starting operations in Thailand.



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