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Rice-Pledging Scheme

Bankers' group calls for clarity

The Thai Bankers Association yesterday urged the caretaker government to urgently tackle public confusion over its latest policy on making payments to rice farmers, which has led to massive deposit withdrawals from the Government Savings Bank.

Deputy PM Kittiratt Na-Ranong told Channel 3 that GSB's liquidity remained stable despite the withdrawals. He insisted that inter-bank lending - such as the GSB's loan to the Bank for Agriculture and Agricultural Cooperatives (BAAC) to cover rice payments - was normal.

However, Twatchai Yongkittikul, secretary-general of the Thai Bankers Association, expressed concern over the volume of customer withdrawals, describing them as massive. Urging the government to clarify the issue, he said the situation was one of confusion and public misunderstanding.

Twatchai said the GSB's inter-bank loan to BAAC could lead to legal problems if the latter directly handed the money to farmers. However, there would be no legal issue if BAAC loaned the money to private firms joining in the rice bidding and allowed the government to repay farmers with proceeds of the stockpile release.

GSB announced that there had been Bt20 billion in net withdrawals yesterday compared to an average of Bt7 billion after long holidays. Yesterday's withdrawals were made mostly by customers dissatisfied with the bank's Bt5 billion loan to the BAAC. The money was to be paid to farmers indebted due to non-payment under the pledging scheme.

The GSB's balance saw deduction of a total of Bt30 billion through withdrawals and closures of accounts, with Bt10 billion in deposits. The activity accounted for around 10 per cent of the GSB's entire liquidity of around Bt200 billion.

A GSB source said the Bt10 billion in deposits were made by state-enterprises that wanted to support the bank. The source did not say whether they wanted to help out with the rice scheme, or problems engulfing the government.

Withdrawals were made mostly in Bangkok, adjacent provinces and the South, GSB chief executive Woravit Chailimpamontri said. The GSB announced a halt to BAAC-bound lending at a press conference at 4.30pm, after Bt5 billion was transferred to the BAAC, from a ceiling of around Bt20 billion it aimed originally to lend.

GSB branches in several provinces were packed yesterday with customers nervous over the rice scheme. Some were seen withdrawing their savings out of fear their money would be used to help pay government debts to the farmers.

GSB staff at several branches dressed in black in protest at the bank's decision to be part of the government's struggling efforts to repay the Bt130 billion its has long owed the rice farmers.

In Satun, the bank's administration hung a banner on the front that read: "The bank will not use customers' savings to repay the rice-pledging scheme."

Some customers remained confident the bank would not use their savings to pay farmers. Some were seen yesterday depositing money into their accounts.

Manager Sompob Panthong said the bank had assured customers it would not use their savings. "The customers understand the situation," he said.

The bank's Krabi branch saw many customers withdrawing money for fear their savings would be used to help fund the scheme. The branch's manager Patcharee Narawisut said many customers had turned up to withdraw their savings. "All I could do was to tell them not to panic. I don't know the exact amount withdrawn. I had already informed the provincial bank's administration." The number of withdrawals yesterday was higher than usual, she said.

Some GSB branches in Chiang Mai and Buri Ram reported there were no unusually high withdrawals or closure of accounts.


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