Tuesday, January 19, 2010

The governor of the Bank for Agriculture and Agricultural Cooperatives (BAAC) confirmed plans to start the Village Bank microfinance program. The BAAC is currently hiring up to 1,000 personnel for program which is expected to start in April of this year. The Village Bank program will be a subsidiary of the BAAC and keep all accounts and activities separate from its main operations.

For individual loans, interest will be charged at 12% per year or 1% per month which is equivalent to the Government Savings Bank (GSB) loan program. However; interest rates at the BAAC are based on a declining balance while the GSB is a fixed rate. The BAAC is planning to include a savings requirement as part of the loan program. During the first three years, available capital for lending will be 6,000 million baht is expected to have up to 300,000 subscribers. Individual loans will normally not exceed 20,000 baht and a maximum amount is capped at 50,000 baht.

The program has a 3 year time span. After this time, it will be assessed to ensure that it is successful in terms of repayments. Prior to starting, the BAAC plans to talk with the GSB and other agencies to ensure that duplication of programs so not exist.

Source: Pandintong / The Daily News