The state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) expects lending growth for its fiscal year ending next March 31 will miss its target due to weak loan demand after declines in crop prices.
President Luck Wajananawat projects loan growth for this fiscal year will rise by only 8%, below the target of 10-11%.
The stagnant economy also contributed to lukewarm loan demand, he said.
In the first half of its fiscal 2014, the BAAC extended 100 billion baht in new loans, with net lending of 32 billion baht.
That does not include loans under the government's subsidy schemes for farmers such as cash handouts of 1,000 baht a rai to rice and rubber farmers, a combined sum of 48.2 billion baht.
The BAAC estimates it will provide another 40-50 billion baht in loans in the second half of its fiscal year.
"The government has not directly stepped in to shore up falling crop prices, causing farmers to lower production and be more prudent in running up debt," Mr Luck said.
He expects all 3.49 million rice farmers will receive their cash payouts by the end of next month.
The BAAC has already transferred 800 million baht under the government cash payout scheme to 70,000 registered rice growers. Payments are expected to accelerate in the coming weeks.
The BAAC can transfer up to 3 billion baht a day to eligible rice farmers.
Apart from the cash payouts to farmers, the National Rice Policy Committee recently approved the BAAC extending loans to farmers who have their own barns for 90% of their rice crop value, up from 80%, with the aim of slowing down sales of 2 million tonnes of the grain.
The government is attempting to push up the price of Hom Mali rice to 16,000 baht a tonne and glutinous rice to 13,000 baht.
Eligible participants will be allowed 20 tonnes each or a maximum of 300,000 baht. The loan scheme will run for four months from Nov 1 until Feb 28, which is the harvesting period for the 2014-15 season.
The BAAC achieved revenue of 33.4 billion baht in its fiscal first half for a net profit of 4.9 billion.
Non-performing loans accounted for 4.61% of total loans, down from 5.6% in the same period last year.