Injects 80 bn THB to develop village

BANGKOK, 7 February 2011 (NNT) – The Finance Ministry has decided to allocate 80 billion THB towards the upgrade of village funds into loan banks as part of the informal debt restructuring policy.

Finance Minister Korn Chatikavanij appointed the state-run Government Savings Bank (GSB) and Bank for Agriculture and Agricultural Cooperatives (BAAC) to uplift the status of village funds into community loan banks in order to provide people in need with easy access to loans.

At present, the GSB oversees the funds of 60,000 villages while the BAAC oversees 20,000. Through the banks, the Finance Ministry will give each village fund an additional 1 million THB with 6 percent interest per annum, which will require a budget of 80 billion THB in total. The funds are allowed to issue loans to villagers at an interest rate of no more than 12 percent per annum, equivalent to the rate provided by the banks in the informal debt restructuring scheme.

Mr Korn confirmed that both banks had already prepared sufficient funds for the development of the community loan banks, targeting about one-third of them to be set up by the end of next year.

As for the high cost of living due to the soaring inflation and oil prices, the Minister insisted that the government would seek solutions to the problem, including hiking interest rates to curb inflation and ensuring an appropriate correlation between people’s income and the expensive commodity prices.