The National Village and Urban Community Fund Office will soon ask the Cabinet to approve a three-year debt moratorium for members of the Village Fund, a government source said on Sunday.
Villagers are facing multiplying debts as they are unable to make repayments to village funds and are thus forced to borrow from loan sharks who charge very high interest rates, thus landing them in even more serious debt. The proposal for debt suspension aims to relieve that burden, said the source.
The revolving village fund initiated by former Thaksin Shinawatra administration in 2001 was designed to help villagers and low-income groups in urban areas access loans. Currently, there are 79,595 village funds nation-wide with membership as high as 13 million and involving Bt300 billion. Over the past four years, the junta-backed government has injected an additional Bt130 into the funds.
Only a few funds have been able to upgrade into local financial institutions, with just 2,560 recorded as of last year.
The current government also assigned the Bank for Agriculture and Agricultural Co-operatives (BAAC) to lend money to village funds, as part of efforts to solve the debts of village fund members who also borrow from underground lenders.
If the Cabinet approves the 3-year debt moratorium, it will be the latest measure implemented by the government in the run-up the general election next year. The government recently offered a combined Bt38.7 billion increase in monthly allowances for the 14.5 million holders of state welfare cards in a move that has been criticised as political campaigning before the election.