As part of its five-year financial sector development plan, Thailand’s Ministry of Finance along with the Bank of Thailand (BOT), the central banking authority in Thailand, has launched a community banking program that mirrors the model of Grameen Bank of Bangladesh. The program, which aims to improve access to finance for poor people in rural areas, is set up so that each community bank will be partly owned and run by members of the community, with financial support provided by state-owned banks when required. Personal guarantees offered by other members of the community will serve as collateral for the loans extended.
The Bank for Agriculture and Agricultural Cooperatives (BAAC), a government-owned bank in Thailand that extends credit to farmers, reportedly aims to use the community banks as a channel to access rural communities. The BAAC has earmarked THB 10 billion (USD 321 million) for the first phase of the project, which aims to help approximately 300,000 people access loans of up to THB 50,000 (USD 1,600) each. THB 6 billion (USD 192 million) of the THB 10 billion is intended to facilitate the training of community bank staff in accounting, operations and “sufficiency economy” concepts [1]. As of 2011, the BAAC has extended THB 436 million (USD 14 million) to 25 of the community banks.
As of 31 March 2010, BAAC reported total assets of THB 764 billion (USD 24 billion), a gross loan portfolio of THB 504 billion (USD 16 billion), return on assets (ROA) of 1.1 percent and return on equity (ROE) of 11.4 percent.
By Medha Ravi, Research Associate
About the Bank of Thailand (BOT):
The Bank of Thailand (BOT) regulates commercial banks, Bank of Agriculture and Agricultural Cooperatives (BAAC) and non-bank financial institutions. In 2007, BOT undertook a restructuring of the banking sector in order to provide windows for both commercial banks and retail banks to conduct microfinance services.
About the Bank for Agriculture and Agricultural Cooperatives (BAAC):
Established in 1966 by the government of Thailand, the Bank for Agriculture and Agricultural Cooperatives (BAAC) operates under the jurisdiction of Thailand’s Ministry of Finance. BAAC was set up to extend to credit to individual farmers and farmer institutions. Its services include savings, credit and other services such as money transfer facilities, payment of utility bills and gift checks. As of 31 March 2010, BAAC reported total assets of THB 764 billion (USD 24 billion), a gross loan portfolio of THB 504 billion (USD 16 billion), return on assets (ROA) of 1.1 percent and return on equity (ROE) of 11.4 percent. BAAC does not report to the US nonprofit data provider Microfinance Information Exchange (MIX).
Source and Resources:
[1] Bangkok Post news article, “Community banks taking shape to give rural residents access to credit, with decision-making firmly in local hands”, http://www.bangkokpost.com/business/economics/222657/shark-repellent
MicroCapital.org story, September 2, 2011, “MICROCAPITAL BRIEF: State Banks to Offer Microfinance Services at Post Offices in Thailand”, https://www.microcapital.org/microcapital-brief-state-banks-to-offer-microfinance-services-at-post-offices-in-thailand/
MicroCapital.org story, January 10, 2011, “MICROCAPITAL BRIEF: Founder of Grameen Bank and Nobel Peace Prize Winner Dr Muhammad Yunus Speaks Out Against the Commercialization of Microfinance Institutions (MFIs)”, https://www.microcapital.org/microcapital-brief-founder-of-grameen-bank-and-nobel-peace-prize-winner-dr-muhammad-yunus-speaks-out-against-the-commercialization-of-microfinance-institutions-mfis/
MicroCapital’s Microfinance Universe Profile: The Bank of Thailand, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+of+Thailand+%28BOT
MicroCapital’s Microfinance Universe Profile: The Bank for Agriculture and Agricultural Cooperatives (BAAC), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+for+Agriculture+and+Agricultural+Cooperatives+%28BAAC%29
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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