Microfinance

Given the well-known rationale for micro-finance for the vulnerable, the Thai government has implemented a variety of ‘Micro/Agricultural credit projects’ to support income security of the poor. Main features of the representative four projects are shown in the table below (ILO, 2008, pp.30-1).
 

Table : Main features of Micro/Agricultural credit projects

 
 
Village Fund
Debt Suspension and Debt Release project
People’s Bank project
Objective
(why)
To improve the earning capacity of lower-income groups (since 2001)
To help small agricultural producers obtain release from debt burden (since 2003)
To promote savings among group members
Activity
(what)
1 million baht to rural villages and urban communities for setting up revolving funds which provide small, low-interest loans without collateral
Borrowers who are less than
100,000 baht in debt to the BAAC(the Bank of Agriculture and Agricultural Cooperatives) are exempted from principal repayment (including
interest payments) for 3 years. The Government compensates the loss of interest to the
BAAC
The People’s Bank provides loans for career improvement and small-scale investment. The People’s Bank offers three types of service: savings, consulting, and loans.
A first-time loan may not exceed 30,000 baht per borrower, for a fixed term of two years.
Repeat borrowers may receive up to a maximum of 50,000 baht, for a longer term of up to three years. The interest rate for the loan is set at 1 per cent throughout the periods involved.
Target beneficiaries
(for whom)
All community members who request a loan and have difficulty gaining access to the formal credit system
Small agricultural producers with a small amount of debt burden
small entrepreneurs and private-sector employees who wish to develop their careers or improve their businesses
 

Reference

ILO (2008), “Inter-regional project: How to strengthen social protection coverage in the context of the European Union Agenda on decent work and promoting employment in the informal economy (Thailand: A case study)”, ILO, Geneva.

 

Social security schemes and programs by branch