01 April, 2010
BAAC Backs Loan Cancellation
BAAC backs B80bn plan
A government proposal to restructure up to 80 billion baht of farm debt is an opportunity for the state-owned Bank for Agriculture and Agricultural Co-operatives to clean up its loan book, says bank president Luck Vajananawat.
The debt moratorium programme would tentatively halve the debt burden for farmers with problem loans of up to 2.5 million baht. Accrued interest would be waived and the remainder of the obligations rescheduled over 15 years.
The plan, spearheaded by Deputy Prime Minister Sanan Kachornprasart, will be presented to the cabinet for approval next month.
Mr Luck said the proposal would help the bank deal with its current non-performing loans.
"If these [non-performing] loans are not addressed in some fashion, eventually they will go completely bad, forcing us to set aside 100% provisions," he said.
The BAAC has about 51,000 customers with combined debts of 12 billion baht as distressed assets under rehabilitation through the Farmers' Reconstruction and Development Fund.
The proposal would cover farmers that were members of the fund as of the end of last year. But participants must agree to enroll in BAAC training programmes on financial management.
Farmers who fail to meet their rescheduled payment obligations would become liable for the full amount of the loan. Participating creditors, including the BAAC, would also have to agree not to enforce their collateral rights to any outstanding debt.
Mr Luck said the BAAC, as well as other private banks, would likely seek compensation from the government to help offset the costs of the programme.
The debt moratorium programme would tentatively halve the debt burden for farmers with problem loans of up to 2.5 million baht. Accrued interest would be waived and the remainder of the obligations rescheduled over 15 years.
The plan, spearheaded by Deputy Prime Minister Sanan Kachornprasart, will be presented to the cabinet for approval next month.
Mr Luck said the proposal would help the bank deal with its current non-performing loans.
"If these [non-performing] loans are not addressed in some fashion, eventually they will go completely bad, forcing us to set aside 100% provisions," he said.
The BAAC has about 51,000 customers with combined debts of 12 billion baht as distressed assets under rehabilitation through the Farmers' Reconstruction and Development Fund.
The proposal would cover farmers that were members of the fund as of the end of last year. But participants must agree to enroll in BAAC training programmes on financial management.
Farmers who fail to meet their rescheduled payment obligations would become liable for the full amount of the loan. Participating creditors, including the BAAC, would also have to agree not to enforce their collateral rights to any outstanding debt.
Mr Luck said the BAAC, as well as other private banks, would likely seek compensation from the government to help offset the costs of the programme.
Source: Bangkok Post

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