The Bank for Agriculture and Agricultural Cooperatives (BAAC) is to give depositors who are farmers the status of shareholders in a bid to give them a sense of ownership as well as to draw long-term funding.

President Thirapong Tangthirasunan said the bank would launch a special one- to three-year deposit account by the end of this year that will also provide shareholding status.

"We would like farmers to feel that they are the owners of the bank. It is hoped this will discourage them from defaulting as well," he said.

Currently, depositors who are farmers have around Bt20 billion of deposits in BAAC. The bank expects to raise another Bt10 billion of funding from the new scheme, which is awaiting approval from the Finance Ministry.

Investors in the new product will get an annual return of around 3-4 per cent, plus about 1 per cent in dividend payments from their shareholding status. The dividend will depend on the bank's performance. Dividend yield has been low because of the bank's non-profit policy.

Thirapong said the idea for the new deposit account was derived from a study of Netherlands-based Rabo Bank, which has offered such products for a long time. France-based Credit Agricole also provides similar products.

The new product, he said, will allow the bank, which is wholly owned by the government, to depend less on government funding via equity. BAAC regularly asks the government for capital increases to finance expansion.

BAAC has been ordered by the government to freeze loan interest rates in order to help customers facing a higher cost of living because of rising oil prices.

As part of a drive for more funding, the bank has issued Bt30 billion of premium certificate savings. It has already sold Bt29 billion and is likely to be sold out by the end of this month. At the end of this year, the bank will launch another Bt20 billion of premium certificate savings.

BAAC needs substantial funding after being assigned to give soft loans to customers affected by natural disasters, including floods in the North.

Thirapong said the bank would like to reduce its foreign-debt burden by taking out fewer foreign loans and concentrating instead on the local market.

Wichit Chaitrong

The Nation