In 1966 the government established the Bank for Agriculture and Agricultural Cooperatives (BAAC) as a state enterprise under the jurisdiction of the Ministry of Finance. Its primary objective is to enhance social and economic well-being of Thailand?s farming population through financial services in the form of loans for agricultural production, investment and marketing. Now close to its 50th Golden anniversary, the bank aims at becoming a Premier Rural Development Bank by concentrating mainly on the uplift of the small scale farmers? quality of life.
BAAC has played significant roles in boosting rural economy; creating jobs and value addition along the agricultural supply chain. BAAC delivers its innovative products and services through its extensive network. Its lending program, primarily providing retail credit to individual farmers (which are organized into joint liability groups), accounted for 74.5 % of the total loan portfolio and the rest for wholesale credit to farmer institutions, consisting of agricultural cooperatives and farmer associations. Now, BAAC has covered a total of 7.27 million farm households or 95 % of total farm households in Thailand.
In addition, BAAC also provides personal accidental insurance, health insurance, funeral aid and services to help Thai Muslims undertake their Mecca pilgrimage. The bank also enhances liquidity in rural community, improves farm production efficiency and cost reduction, establishes village funds and sufficiency economy funds, and
creating the unemployed home coming project and designs model community development applying the concept of Sufficiency Economy, as espoused by His Majesty the King in His Sufficiency Economy Philosophy. This Philosophy helps to introduce the concept of moderation, reasonableness, and resilience to change to our new way of doing banking business. BAAC now goes beyond savings and loans to reach sustainable development. A concept of credit plus technical assistance has been implemented by BAAC to promote value addition activities with knowledge dissemination.
As of February 2013, BAAC recorded total assets of 1.18 trillion Baht or US$ 39 billion with loan outstanding of 949 billion Baht or US$ 31 billion. The growth of BAAC assets is mainly due to growth of lending as a result of greater improvement of access to rural finance through its extensive network. Meanwhile its non-performing loans (NPLs) stood at a low rate of 5.78%.
Previously BAAC relied substantially on government budget, overseas borrowings and forced savings from commercial banks as sources of funds. Later, BAAC started its savings mobilization and gradually built up its own strong deposit base and now has become self-reliant in its rural financing functions. Deposits become the main source of BAAC funds accounting for 84% of the total. As a result, BAAC has generated an unprecedented record of 986 billion Baht savings or US$ 33 billion through its famous Thaweesin and Thawechoke savings schemes.
BAAC continues to enter into the government?s agricultural produce pledging scheme, futures market and crop insurance. The bank creates production and marketing linkage through cooperatives and their apex organization - Thai agribusiness Company or TABCO, a company owned 90% by farmers and 10% by BAAC.
To ascertain that rural financial services are fully provided at grass roots level, BAAC has now a total of 19,922 officers and staff in 77 provincial offices and 1,118 branches throughout Thailand. Thus, BAAC has been and will remain a key player in rural finance in Thailand.
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