(Source: By Wichit Chantanusornsiri, Bangkok Post, Thailand (MCT) – Two million credit cards will be handed out to farmers nationwide next month, says Deputy Finance Minister Tanusak Lek-uthai.
Card debt will offer five-month payment terms at zero interest, he said.
The Bank for Agriculture and Agricultural Cooperatives (BAAC) yesterday signed agreements with PTT, Bangchak and representatives of farm equipment makers to support the card scheme, set to be formally launched by Prime Minister Yingluck Shinawatra next month.
Under the scheme, farmers taking part in the government’s rice mortgage programme may use the credit cards to buy goods such as petrol, fertiliser, seeds and other inputs.
Money borrowed with the cards is offset by crop pledges made by the farmers to the state bank.
A pilot project initiated by the BAAC involving 5,520 cards has outstanding credit of 7.27 million baht.
The bank is currently in the process of issuing an additional 823,000 cards and reviewing applications for 806,000.
A total of 2,352 retailers have committed to participating in the project as well as another 1,000 filling stations under the PTT and Bangchak brands.
Under the five-month credit terms, the BAAC will absorb the financing cost equivalent for one month, with the retailers absorbing the cost for the remaining four months.
PTT and Bangchak will also offer discounts of seven satang a litre for fuel purchases using the cards, with a limit of 100 litres per month.
Payment terms, however, will be set at 30 days only for fuel purchases.
Mr Tanusak said the total credit line offered under the cards will be limited to 70% of the value of the crops produced by the cardholding farmer.
BAAC president Luck Wajananawat estimates his bank’s funding cost for absorbing one month’s interest at 116 million baht a year.
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