Rural people given access to more cash

The government yesterday transferred Bt907 million to the village revolving-fund project as support for new rural and urban communities.

Finance Minister Surapong Suebwonglee said the micro-credit scheme initiated by the Thaksin Shinawatra administration in 2001 had met its goals. The government has distributed Bt78 billion in total, with each village getting Bt1 million.

Villagers also contributed about Bt33 billion to the funds. The funds' cash flow is estimated at Bt130 billion, he told a workshop on management of village and community funds.

About 80 per cent of borrowings has been spent on agriculture. Bad debt is low at only about 4 per cent of total lending.

The increasing participation of women in management of the funds and in taking out loans from them contributed to the funds' success, he said.

The government will continue providing liquidity to new villages. The past few years have seen about 1,600 new villages, so government support will not increase much each year, Surapong added.

State-owned banks - the Government Savings Bank, the Bank for Agriculture and Agricultural Cooperatives (BAAC) and Krung Thai Bank - will keep extending loans to villages that achieve outstanding results, he said.

Surapong was optimistic about the sustainability of the funds, saying villagers feel that they own their fund and have to employ prudent management in running them.

About 500 village funds have been upgraded to community banks, with 2,000 more to follow suit.

Critics claim the government-sponsored credit scheme mainly boosts consumption and there is a risk of rising debts among farmers.

On another matter, Surapong said it would not take much time before he decided on whether to approve the foreign partner for BankThai, as he has separated BankThai's recapitalisation issue from the investigation into its past management, which will take much longer.