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 |
Social security schemes and programs by branch