The Bank for Agriculture and Agricultural Cooperatives (BAAC) has announced details of its Village Banking program. The focus of the program is for rural and lower income households and to assist them to transition from taking loans from the formal financial sector instead of informal moneylenders.

The Village Banking program will be a sub-unit and act independently from the work of the BAAC but the services will be based in BAAC branches in order to reduce operating costs. Initial credit allocation will be 6 billion baht ($180 milllion USD). Interest rates will be 1 % per month (12% per year) for individual borrowers and 0.75% per month (9% per year) for group borrowing.

The program has been approved by the Ministry of Finance and is expected to start on April 1 of this year.

Mr. ThanaWichai, Director General of the Economic and Business Forecasting Center at the University of Thai Chamber of Commerce, supports the concept. “It will be a key starting point to enable people in the community. It will provide more access to capital in the formal sector rather than relying on outside sources of capital like the current system. However, operations should focus on the issue of saving rather than borrowing alone in order to help the community is really strong.”


Source: Matichon