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Bank for Agriculture and Agricultural Co-operatives (BAAC) Financing Microenterprise the Case of BAAC By.

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Presentation on theme: "Bank for Agriculture and Agricultural Co-operatives (BAAC) Financing Microenterprise the Case of BAAC By."— Presentation transcript:

1 Bank for Agriculture and Agricultural Co-operatives (BAAC) Financing Microenterprise the Case of BAAC By

2 Topics of Discussion About BAAC Historical Background Structure and Service Network Products and Services Operating Funds BAAC’s operations as of 31 March 2010 Financing microenterprises

3 Vision •“To be a secured rural development bank with modern managerial technology focusing on the uplift of small-scale farmer’s quality of life” ”

4 Missio n 1. To render integrated credit services to enhance farmers’ opportunity for effectively improved productivity; 2. To streamline social development regarding agriculture-based learning for the improved quality of life of farmers so that they will be valuable human resource assets and worthy members of society; 3. To administer funds in such a manner that the cost is kept at the appropriate level reflecting the bank’s key mission with emphasis on liquidity and stability; 4. To develop new areas of services to effectively and productively meet farmers’ needs on the strength of high-caliber staff with sound judgment.

5 Historical Background Establish in 1966 As a state enterprise under the jurisdiction of MOF to replace the Bank for Cooperatives In response to the financial needs of farmers who during that period depended largely on local money lenders

6  Reducing the roles of non-formal financial sector  Introducin g innovative financial mechanism by adopting of joint liability group as a collateral for small scale farmers 1966-1976  Facilitating credit services by introducing cash credit- line  Offering credit in kind for providing farm-input  Launching of credit production and marketing linkage  Introducing crop pledging scheme 1976-1986  Scaling-up credit provision to small-scale farmers  Launching farm related credit  Establishing Agricultural Marketing Cooperative (AMC) 1986-1996  Launching non-farm credits, quality of life credits supplement income generating credit  Adoption of Philosophy of sufficiency economy  Enhancing rural community strength 1996-2006 BAAC’s Development

7 BAAC Development  To promote the improved quality of life of small scale farmers.  To extend credit services to persons, groups of persons, entrepreneurs, village or community funds, organizations aiming to promote the career of farmers and communities, and all types of cooperatives.  To extend credits to promote the efficiency production of client farmers. 2006 – Present

8 Board of Directors Executive Vice President (Mr.Ennoo Suesuwan) • Personal Loan Department • Institutional Loan Departmen • Office of Rural bank project Executive Vice President (Mr.Boonchuey Chaidamrongchai) • Government Secured Loan Department Executive Vice President (Mr.Pornchai Limpapas) • Strategic Product Markting Department • Debt Management Line Executive Vice President (Mr.Isorn Ekpisankit) • Customer and Rural development Department • Office of customer and Product Development Executive Vice President (Mr.Vinai Kruetreepradit) • Deposit Services Department • Office of Electronic Banking Audit Department Customer and Product Development Group Senior Executive Vice President (Mr. Ennoo Suesuwan) • Management Department • Offrice of Public Relation and Organization Communication Risk Management CommitteeAudit Committee President Branch Adminisitration Group Senior Executive Vice President (Mr. Pramote Nontakote) Organization Strategy Group Senior Executive Vice President (Mr. Somchai Aumphan) Accounting, Treasuty and Information System Group Senior Executive Vice President (Mrs. Poonsook Musiklad) Executive Vice President (Mr.Boonthai Kaewkhuntee) Office of BAAC Northern Region • Branch Administration (Upper Northern Region) • Branch Adminstration (Lower Northern Region) Executive Vice President (Mr.Pornchai Limpapas) Office of BAAC Northeatern Region • Branch Administration (Upper Northeastern Region) • Branch Administration (Lower Northeastern Region) Executive Vice President (Mr.Isorn Ekpisankit) Office of BAAC central and Eastern Region • Branch Administration (Central Region) • Branch Administration (Eastern Region) Executive Vice President (Mr.Boonchuey Chaidamrongchai) Office of BAAC Southern and Western Region • Branch Administration (Western Region) • Branch Administration (Upper Southern Region) • Branch Administration (Lower Southern Region) Executive Vice President (Mr.Adul Kanchanwat) • Policy and Strategy Department • Human Resources Department • Office of Organization and System Development • Office of Research BAAC Executive Vice President (Mr.Prayong Tenbee) • General Administration Department • Office of Property Management and Building • Legal Affair Department Executive Vice President (Mr.Kamolpant Asaves) • Accounting Department • Treasury Department • Bank and International Business Department • Risk Mangement Department Executive Vice President (Mr.Vinai Kruetreepradit) • Information Technology Research Department • Office of Information Technology Program Mr.Luck Wajananawat Senior Executive Vice President (Mr.Promote Nontakote)

9 Service Network 75 Provincial branches 1,044 branches and sub-branches 988 ATMs 1,043 Farmers’ Institutions ( Memberships 1.64 mil. ) Individual Clients 4.61 mil. 2 Agricultural Central Markets

10 Products and Services • Credit services • Wide rage of agricultural loans and non-farm loans • Loans for quality of life • - education • - medical care • - others • Banking Services • Wide range of Savings Thaweechoke • Thaweesin • Money transfer • Account payment • Currency Exchange

11 178 12,612 Starting 1966 2010 Number of staff 1966-2010

12 1,890 6,094,542 Starting 1966 2010 Unit : Household Number of clients 1966-2010

13 Active Clients (Individual Farmer Clients) Not over 200,000 Baht 2,707,508 Clients Between 200,001 - 1,000,000 Baht 686,357 Clients Between 1,000,001 – 15 million Baht 23,310 Clients 2,707,508 clients 686,357 client s 23,310 client s As of October 31, 2010 Total 3,417,175 clients

14 143 764,945 Starting 1966 2010 Unit : Million of Thai Baht BAAC Operating Fund 1966-2010

15 Operating Fund As of March 31, 2010 As of Oct. 30, 2010 764,945 Mil. Baht 799,056 Mil.Baht 5%5%

16 1,195 642,499 Starting 1975 2010 Unit : Million of Thai Baht Deposits from general public- 2010

17 78 332,000 Starting 1966 2010 Unit : Million of Thai Baht Disbursement 1966-2010

18 380 504,884 Starting 1967 2010 Unit : Million of Thai Baht Loan Outstanding 1967- 2010

19 Financial Status Unit : Mil. Baht

20 Financial Ratio

21 BAAC Plans &Significant Projects 1. Risk Management for Farmer Clients 2. Market Development for Farmer Clients 3. Knowledge Development and Strengthening Farmer Clients and Communities

22 1. Risk Management for Farmer Clients 1.1 Weather Index Insurance 3,194 insured farmers in 7provinces Planting areas 60,688 rai* Insured fund 72.143 Mil. Baht 1,158 insured farmers in 16 districts of Khon-Kaen province Planting areas 8,040 rai Insured fund 16.080 Mil. Baht As of Oct 31,2010 Premium 6.069 Mil. Baht Indemnity 4.326 Mil. Baht Premium 0.746 Mil. Baht Indemnity 0.119 Mil. Baht Streamline for setting up Agricultural Alleviation Fund First crop paddy in Year 2010 Collaboration with Sompho Japan Insurance Co.Ltd Maize in Year 2010 Collaboration with WB+ General Insurance Assoc. * 1 ha = 6.25 rai

23 1. Risk Management for Farmer Clients 1.2 Assistance for flooded farmers 1.2 Assistance for flooded farmers in 53 Provinces, in 53 Provinces, 517,711 Clients Assistance Measures Hand-out subsistence bags for 49,630 clients, amounting 9.92 Mil Baht Donate 1 Mil Baht under the Government-to-People Help Project Debt Suspension for farmers/interest free 3% per annum, principal 47,090 Mil Baht 9 deceased clients were loan written off, amounting 625,027 Baht Nov 9, 2010

24 1. Risk Management for Farmer Clients 1.3 Thaweesuk Fund 1.3 Thaweesuk Fund Oct 31,2010 Number of participating clients : 785,701 Amount of savings 2,135 Mil. Baht 5 Steps of welfare system given to Thaweesuk members Protection amount not over 100,000 Baht in case of dying of accident New born fee for 2 babies with 500 Baht each Funeral fee in case of dying of illness not over 10,000 Baht Compensation fee for medical treatment in case of accident not over 800 Baht Be able to use 30% of savings as loan collateral

25 3. Knowledge Development and Strengthening Farmer Clients and Communities 3.3 Community Bank 3.3 Community Bank Target: Credit provision to 300,000 clients, 6,000 Mil. Baht Performance as of Oct 31, 2010 1,790 clients, amounting 36 Mil. Baht Provide opportunities for low income groups accessible to formal source of fund Village Financial Advisor To finance organizations in community i.e village funds, rural financial institutions or savings groups etc. driven by

26 Plan/Government-Secured Loan Projects 1.Informal Debt Solving Scheme 3. Rehabilitation and Debt Suspension for poor and small farmers Project 4. Agricultural Products Pledging Scheme crop year 2008/2009 5. Farm Income Guarantee Scheme 2. Households Financial Advisor Project

27 1. Informal Debt Solving Scheme Registered farmers : 637,098 Loan outstanding 67,708.59 Mil. Baht No. of farmers using BAAC loans : 354,715 Credit extended 26,148.92 Mil. Baht As of Sep 30,2010 Train farmers in 289 Learning Centers Train Living Plan Course to 34,748 farmers Train Income Generation Course 8,063 farmers

28 2. Village Financial Advisor Project Target : 26,000 clients covering 26,000 villages Check household financial health Provide consultancy service Render financial service Duties **To train advisory knowledge in finance to 650 volunteer advisors in 13 provinces by November 2010

29 3. Rehabilitation and Debt Suspension for Poor and Small Farmer Project Participating farmers : 206,709 Phase 1: Living Plan Course 206,709 farmers Phase 2 : Income-Generation Course 192,175 farmers Phase 3 : Selection Course 6,244 farmers Project completion as of March 31,2010 No. of trained farmers

30 4. Agricultural Products Pledging Project, production crop year 2008/2009 Crop Pledged Amount (mil. Ton) Amount (Mil. Baht) Amount receivable Pending Reimbursement (Mil. Baht) First crop paddy 6.0667,05 7 43,659 0.998.3774,402 11.6622,99 8 10,266 Total 18.7198,43 2 58,327 Second crop paddy 5.4762,61 9 41,597 Grand Total 24.18161,0 51 99,924 ** Fy 2009/2010 The Project is changed to the Farm Income Guarantee scheme As of Oct 31,2010 Commitment Balance 66,806 Mil. Baht

31 5. The Farm Income Guarantee Scheme 5.1 The Farm Income Guarantee Scheme, crop year 2009/2010 CropRegistered farmers in community meeting Contracted farmers Farmers received compensation Persons Amount (Mil. Baht) First crop paddy 3,411,8383,272,8 75 3,195, 820 28,427 398,396392,521379,76 2 5,637 445,789427,221380,59 5 2,434 Second crop paddy 832,368825,033782,79 4 18,404 Total5,088,3914,917,6 50 4,738, 971 54,902 As of Oct 31, 2010 Loan allocated under SP 2 amounting 40,000 mil. Baht, amount reimbursed 39,513 mil. Baht Loan allocated under fiscal budget 2011 (second crop paddy) amounting 5,270.98 mil. Baht

32 Financing Microenterprises under BAAC’s operations • Defined by loan size(≤ THB 50,000) • 2 Types of microenterprises – Entrepreneurs and Community enterprises •

33 The Importance of Microenterprises • Creating jobs • Generating incomes • Creating value add to primary products • Income distribution • Promoting and sharing of knowledge

34 Characteristics of BAAC’s Microenterprises • Very small size of loans • Very small business volume • Lack of managerial skills • Low technology • Lack of access to conventional financial institutions • Lack of collateral

35 Financing Microenterprises • Qualifications – Legal entity – Thai national – At least 1 year of operation and profitable – Venue situated in Thailand – Skilled or accomplished training course(s) – Permanent resident in the area of certain branch at least 6 months

36 Financing microenterprises • Types of loans – Short term loan as working capital – Long term loan for investment • Interest rate – MLR + 0-5% • Collateral – Joint liability group – Guarantors – Mortgaged properties

37 Factors Determining Interest Rates • Characters 15 points • Performance 15 points • Credit records 20 points • Collateral 25 points • Project feasibility 25 points

38 Thank you for your attention

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