Finance Minister Korn has given the green light for program.

Saturday, 16 January 2010

In a meeting this week, Finance Minister Korn informed the Board of Directors of the Bank for Agriculture and Agricultural Cooperatives (BAAC) that he has approved the establishment of the Village Banking program. The Village Bank model is different from the Government Savings Bank but with similar goals of disbursing credit to millions of people who currently take loans from loan sharks. The new program will focus on rural communities and will be very comprehensive in it services.

Village Banks help people and entrepreneurs who have low income to access capital in the formal financial sector. Often called microfinance, the program will be able to allocate approximately 6,000 million baht as working capital during the first three years of operations. The government intends to force existing lending programs, such as existing savings groups or NGO programs, to join with the BAAC to create a more streamlined and efficient system.

It is estimated that each Village Bank will have about 100 members and will be eligible for loans with interest rates of .75% per month. Individuals may borrow from the program at 1% per month.

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