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Financing Microenterprise the Case of BAAC

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Presentation on theme: "Financing Microenterprise the Case of BAAC"— Presentation transcript:

1 Financing Microenterprise the Case of BAAC
By Mr. Chamnong Siriwongyotha Team Leader Office of International Cooperation Bank for Agriculture and Agricultural Co-operatives (BAAC) 1

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 Mission 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 BAAC’s Development 1966-1976 1976-1986 1986-1996 1996-2006
Reducing the roles of non-formal financial sector Introducing innovative financial mechanism by adopting of joint liability group as a collateral for small scale farmers 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 Scaling-up credit provision to small-scale farmers Launching farm related credit Establishing Agricultural Marketing Cooperative(AMC) Launching non-farm credits, quality of life credits supplement income generating credit Adoption of Philosophy of sufficiency economy Enhancing rural community strength

7 BAAC Development 2006 – Present
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. 7

8 Branch Adminisitration Group Organization Strategy Group
Board of Directors Audit Committee Risk Management Committee President Senior Executive Vice President (Mr.Promote Nontakote) Mr.Luck Wajananawat Management Department Offrice of Public Relation and Organization Communication Audit Department Customer and Product Development Group Senior Executive Vice President (Mr. Ennoo Suesuwan) 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.Ennoo Suesuwan) Personal Loan Department Institutional Loan Departmen Office of Rural bank project (Mr.Boonchuey Chaidamrongchai) Government Secured Loan Department (Mr.Pornchai Limpapas) Strategic Product Markting Department Debt Management Line (Mr.Isorn Ekpisankit) Customer and Rural development Department Office of customer and Product Development (Mr.Vinai Kruetreepradit) Deposit Services Department Office of Electronic Banking Executive Vice President (Mr.Boonthai Kaewkhuntee) Office of BAAC Northern Region Branch Administration (Upper Northern Region) Branch Adminstration (Lower Northern Region) (Mr.Pornchai Limpapas) Office of BAAC Northeatern Region Branch Administration (Upper Northeastern Region) Branch Administration (Lower Northeastern Region) (Mr.Isorn Ekpisankit) Office of BAAC central and Eastern Region Branch Administration (Central Region) Branch Administration (Eastern Region) (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 (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 (Mr.Vinai Kruetreepradit) Information Technology Research Department Office of Information Technology Program

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

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 Number of staff 2010 12,612 Starting 1966 178

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

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

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

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

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

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

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

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

23 1. Risk Management for Farmer Clients
1.2 Assistance for flooded farmers Nov 9, 2010 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

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

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

26 Plan/Government-Secured Loan Projects
Informal Debt Solving Scheme 2. Households Financial Advisor Project 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

27 1. Informal Debt Solving Scheme
As of Sep 30,2010 Registered farmers : 637,098 Loan outstanding 67, Mil. Baht No. of farmers using BAAC loans : 354,715 Credit extended 26, Mil. Baht 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 Duties Provide consultancy service Render financial service **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 Project completion as of March 31,2010 No. of trained farmers Phase 1: Living Plan Course 206,709 farmers Phase 2 : Income-Generation Course ,175 farmers Phase 3 : Selection Course 6,244 farmers

30 4. Agricultural Products Pledging Project, production crop year 2008/2009
As of Oct 31,2010 Crop Pledged Amount (mil. Ton) Amount (Mil. Baht) Amount receivable Pending Reimbursement (Mil. Baht) First crop paddy 6.06 67,057 43,659 0.99 8.377 4,402 11.66 22,998 10,266 Total 18.71 98,432 58,327 Second crop paddy 5.47 62,619 41,597 Grand Total 24.18 161,051 99,924 Commitment Balance 66,806 Mil. Baht ** Fy 2009/2010 The Project is changed to the Farm Income Guarantee scheme

31 5. The Farm Income Guarantee Scheme
5.1 The Farm Income Guarantee Scheme, crop year 2009/2010 As of Oct 31, 2010 Crop Registered farmers in community meeting Contracted farmers Farmers received compensation Persons Amount (Mil. Baht) First crop paddy 3,411,838 3,272,875 3,195,820 28,427 398,396 392,521 379,762 5,637 445,789 427,221 380,595 2,434 Second crop paddy 832,368 825,033 782,794 18,404 Total 5,088,391 4,917,650 4,738,971 54,902 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, 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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