The BAAC's president, Thirapong Tangthirasunan, said yesterday that highly indebted customers would be recruited to undertake three years' training on the principles of sufficiency economy. A total of 10,000 farmers will be invited to participate in what is seen as a pilot project.

The bank will work closely with the royal self-sufficiency economy project chaired by Her Royal Highness Princess Maha Chakri Sirindhorn.

Recent policies of the Thaksin government placed priority on the availability of credit for farmers and large-scale debt forgiveness measures for people on the land. Asked if the BAAC's new direction is a departure from government policy, Thirapong said the bank needed to dig into the root problems of farmers, a task that is more difficult to implement than giving away money.

"If we know their problems, such as poor quality of the soil, and we fix them, then we can lend to them later," he said.

"When I had the opportunity to look closely at the sufficiency economy project, I knew how stupid I had been," Thirapong said.

The Thaksin government has used the BAAC and other state-owned banks to implement policies over the past five years that critics have lambasted as easy credit, and raising farmers' debts by boosting consumption.

Critics also accused the government of failing to pay much attention to the concept of sufficiency economy. Economists have interpreted the concept as guidelines for economic discipline and building society's immunity to financial problems. They say the guidelines apply equally at an individual level.

Meanwhile, the BAAC also announced it is lifting its interest rate on six-month term deposits to 4.25 per cent. The rate will apply immediately to deposits of at least Bt50,000. By comparison, most commercial banks offer between 3.25 per cent and 4 per cent for six-month term deposits.

Thirapong said the BAAC was a latecomer as other banks had already raised their saving rates to attract savers, as liquidity began to dry up.

Thirapong said the bank's new six-month savings promotion would be available until May 15.

However, it comes with a twist. Depositors who want to access their savings before the end of the six-month period will have to pay a fee of up to 3.25 per cent of the principal amount. This is because the bank wants them to save for as long as half a year, Thirapong said.

The BAAC is targeting middle-income savers, government agencies and district administrations, or tambon organisations, to join this scheme and it expects to raise additional deposits of Bt10 billion.

The funds will be used to support small industries and community enterprises in rural areas.

Wichit Chaitrong

The Nation