The BAAC plans to extend new loans worth Bt252.6 billion in its current accounting year, which started on April 1.

Thirapong's announcement came after the Finance Minister Chalongphob Sussangkarn urged state-owned specialised financial institutions (SFIs) to further expand their loans or undertake debt restructuring for low-income groups.

He said the BAAC would provide further support for village funds created during the Thaksin Shinawatra government.

This year the BAAC will lend Bt15 billion to 17,000 village funds under its support. Last year the bank gave Bt13 billion to these villages, he added.

Thirapong said village funds had been working successfully with the bank, with only 2 per cent recorded as non-performing loans.

"We will act as the wholesale bank and further support village funds by giving loans to them and assigning them to work for us by relending to farmers," he said.

The bank charges an interest rate of 6 per cent for village funds. Villagers who borrow from the funds must make repayments within a year. They use the loans for their children's education and other emergency spending, he said.

The BAAC this year will place more importance on medium and long-term loans to help farmers buy machinery.

The bank plans to lend up to Bt180 billion for individual farmers, Bt50.6 billion for community clients and Bt22 billion for local governments and community enterprises.

It will also restructure debts for farmers whose farms have been damaged by natural disasters.

He said the bank would take into account the environmental impact of agriculture. "We will urge farmers to give up planting maize on high sloping land, and palm oil for energy will be zoned," he said.

By the end of the year, the bank expects its new credit to have expanded by 8.5 per cent, against growth of 6 per cent last year.

Thirapong said BAAC's profit would be the same as last year. In the last accounting year, it reaped profits of Bt2.9 billion.

Non-performing loans stood at 4.1 per cent. However, if the bank applies new accounting standards suggested by the Bank of Thailand, its bad-debt rate is expected to rise.

The BAAC plans to mobilise more that Bt25 billion of savings from outstanding savings of Bt496.84 billion.

In a related development, the institution yesterday signed a cooperation agreement with Kasetsart University and the University of the Philippines to train personnel working in the rural finance field.

Chalongphob wants SFIs to further extend loans, even though some may face difficulties because previous loans have turned non-performing since the onset of the economic slowdown.

The Small and Medium Enterprise Development Bank of Thailand also plans to give soft loans for super-prime clients. The Export-Import Bank of Thailand, meanwhile, has been asked to help exporters who have suffered from the baht's appreciation.

The Government Housing Bank has been urged to take care of home-buyers, and its president Khan Prachuabmoh has proposed to Chalongphob that specific business taxes be cut in order to boost the real-estate sector.

The Government Savings Bank has also been asked to provide further loans to small traders and start-ups.

Wichit Chaitrong

The Nation