The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) is talking up a liquidity surplus of 160 billion baht available for new loans.

Executive vice-president Somsak Kangteerawat says the excess liquidity is sufficient for loan expansion through regular business operations.

The BAAC has been a source of funding for the government's rice pledging scheme.

It has already spent 167 billion baht on top of 90 billion required by the government to finance the rice subsidy so far, as the 500-billion-baht budget set by the cabinet has been fully used.

Of the total 500-billion-baht revolving budget, 410 billion was derived from money borrowed by the BAAC but guaranteed by the Finance Ministry, and the remaining 90 billion was from the bank itself.

The rice pledging scheme, a vote-winning policy of the ruling Pheu Thai Party, has been lashed by several economists for initially setting a guaranteed price 40-50% above the global market price with no limit on buying volume.

Despite losses of 137 billion baht in the first harvest year of the scheme, the government recently approved a 270-billion-baht budget to renew the scheme for this harvest year with slight changes.

Under the new conditions, the pledging price for paddy from the main crop has been set at 15,000 baht a tonne for white rice and 20,000 baht for Hom Mali rice, with the pledged amount capped at 350,000 baht per farm household.

The main crop runs from Oct 1 this year to Feb 28, 2014.

The price for second-crop paddy has been set at 13,000 baht a tonne, capped at 300,000 baht for each household. The second crop runs from March 1-Sept 30, 2014.

Mr Somsak said the government has not asked the BAAC for additional funds for the main crop of this harvest year.

Although the government has approved the 270-billion-baht budget, whether this includes or excludes the 500-billion-baht budget remains unclear.

As of this past Monday, the Commerce Ministry had repaid the state-owned bank 140 billion baht from selling stockpiled rice.

The government bought 14.8 million tonnes from the main crop and 6-7 million tonnes from the second crop in the second harvest year compared with 21.7 million tonnes bought during the first harvest year.

Separately, the BAAC yesterday launched a new savings deposit product carrying average interest of 1.42% excluding lucky draws, with a goal of 10 billion baht in deposits.

It plans to raise 82 billion baht in deposits in its fiscal year ending next March 31.

During the first six months to September, the bank saw its deposits increase by 35 billion baht, raising total deposits to 1.035 trillion.

Source: Bangkok post