The Bank for Agriculture and Agricultural Cooperatives (BAAC) is exploring solutions to address non-performing loans (NPLs) among elderly borrowers, including establishing an asset management company.
According to Deputy Finance Minister Julapun Amornvivat, the largest lender to farmers in the country has a number of elderly borrowers. Among these, a significant portion of loans have become NPLs that the bank cannot write off, totalling nearly 100,000 accounts valued at roughly 10 billion baht.
Addressing the debt of this group is difficult because of their lack of income, he said.
Transferring the debt burden to their descendants is infeasible as no one is willing to take on the responsibility, said Mr Julapun.
Moreover, 60% of these debts are unsecured with no collateral.
He said managing this group of debts through an asset management company (AMC) could be a viable solution to address the NPLs, easing the debt burden for elderly borrowers.
In addition, establishing an AMC might encourage descendants who wish to retain the right to use the land, currently used as collateral, to take over the debt obligation, said Mr Julapun.
The BAAC has an NPL ratio of 5.8% of total loans. Resolving this issue would help reduce the bank's NPL ratio to some extent, he said.
Most of the bank's borrowers are farmers, a vulnerable group with limited debt repayment capacity.
BAAC is trying to attract stronger borrowers, particularly mid-sized and large agribusinesses, to create a more balanced loan portfolio.
However, the bank remains committed to its role as a state-owned specialised financial institution focused on lending primarily to small-scale farmers, said Mr Julapun.
The BAAC previously implemented a debt suspension policy for small farmers with debts of less than 300,000 baht.
More than 1.41 million borrowers joined the programme, covering debt totalling more than 209 billion baht.
This policy, initiated by the government, aimed to ease the financial burden on farmers who were affected by the recent economic downturn.
