bank for agriculture and agricultural co-operatives (baac) financing microenterprise the case of...
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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
Vision
• “To be a secured rural development bank with modern managerial technology focusing on the uplift of small-scale farmer’s quality of life” ”
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.
Historical BackgroundEstablish in 1966
As a state enterprise under the jurisdiction of MOF to replace the
Bank for CooperativesIn response to the financial needs of
farmers who during that period depended largely on local money
lenders
Reducing the roles of non-formal financial sectorIntroducing innovative financial mechanism by adopting of joint liability group as a collateral for small scale farmers
1966-1976 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
1976-1986
Scaling-up credit provision to small-scale farmers
Launching farm related credit
Establishing Agricultural Marketing Cooperative(AMC)
1986-1996 Launching non-farm credits, quality of life credits supplement income generating credit
Adoption of Philosophy of sufficiency economy
Enhancing rural community strength
1996-2006
BAAC’s Development
BAAC Development 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.
2006 – Present
Board of Directors
Executive Vice President (Mr.Ennoo Suesuwan)• Personal Loan Department• Institutional Loan Departmen• Office of Rural bank project
Executive Vice President (Mr.Boonchuey Chaidamrongchai)• Government Secured Loan Department
Executive Vice President (Mr.Pornchai Limpapas)• Strategic Product Markting Department• Debt Management Line
Executive Vice President (Mr.Isorn Ekpisankit)• Customer and Rural development Department• Office of customer and Product Development
Executive Vice President (Mr.Vinai Kruetreepradit)• Deposit Services Department• Office of Electronic Banking
Audit Department
Customer and Product Development GroupSenior Executive Vice President (Mr. Ennoo Suesuwan)
• Management Department• Offrice of Public Relation and Organization Communication
Risk Management CommitteeAudit Committee
President
Branch Adminisitration GroupSenior Executive Vice President
(Mr. Pramote Nontakote)
Organization Strategy GroupSenior Executive Vice President
(Mr. Somchai Aumphan)
Accounting, Treasuty and InformationSystem Group Senior Executive Vice President (Mrs. Poonsook Musiklad)
Executive Vice President (Mr.Boonthai Kaewkhuntee)Office of BAAC Northern Region• Branch Administration (Upper Northern Region)• Branch Adminstration (Lower Northern Region)
Executive Vice President (Mr.Pornchai Limpapas)Office of BAAC Northeatern Region• Branch Administration (Upper Northeastern Region)• Branch Administration (Lower Northeastern Region)
Executive Vice President (Mr.Isorn Ekpisankit)Office of BAAC central and Eastern Region• Branch Administration (Central Region)• Branch Administration (Eastern Region)
Executive Vice President (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
Executive Vice President (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
Executive Vice President (Mr.Vinai Kruetreepradit)• Information Technology Research Department• Office of Information Technology Program
Mr.Luck WajananawatSenior Executive Vice President (Mr.Promote Nontakote)
Service Network
75 Provincial branches
1,044 branches and sub-branches
988 ATMs
1,043 Farmers’ Institutions(Memberships 1.64 mil.)
Individual Clients4.61 mil.
2 Agricultural Central Markets
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
2509
2510
2511
2512
2513
2514
2515
2516
2517
2518
2519
2520
2521
2522
2523
2524
2525
2526
2527
2528
2529
2530
2531
2532
2533
2534
2535
2536
2537
2538
2539
2540
2541
2542
2543
2544
2545
2546
2547
2548
2549
2550
2551
178
12,612
Starting 1966
2010
Number of staff 1966-2010
2509
2510
2511
2512
2513
2514
2515
2516
2517
2518
2519
2520
2521
2522
2523
2524
2525
2526
2527
2528
2529
2530
2531
2532
2533
2534
2535
2536
2537
2538
2539
2540
2541
2542
2543
2544
2545
2546
2547
2548
2549
2550
2551
1,890
6,094,542
Starting 1966
2010
Unit : Househol
d
Number of clients 1966-2010
2509
2510
2511
2512
2513
2514
2515
2516
2517
2518
2519
2520
2521
2522
2523
2524
2525
2526
2527
2528
2529
2530
2531
2532
2533
2534
2535
2536
2537
2538
2539
2540
2541
2542
2543
2544
2545
2546
2547
2548
2549
2550
2551
143
764,945
Starting 1966
2010Unit : Million of Thai Baht
BAAC Operating Fund 1966-2010
Operating Fund
Deposit 658,460
Mil. Baht (82%)
Others 19,297
Mil. Baht (2%)
Shareholders' Equity
77,718 Mil. Baht (10%)Borrowings 43,581
Mil. Baht (5%)
As of March 31, 2010 As of Oct. 30, 2010
764,945 Mil. Baht 799,056 Mil.Baht
Deposit 642,499
Mil. Baht (84%)
Others 26,423
Mil. Baht (3%)
Shareholders' Equity
73,557 Mil. Baht (10%)
Borrowings 22,466
Mil. Baht(3%)
5%
1,195
642,499
Starting 1975
2010Unit : Million of Thai Baht
Deposits from general public- 2010
2509
2510
2511
2512
2513
2514
2515
2516
2517
2518
2519
2520
2521
2522
2523
2524
2525
2526
2527
2528
2529
2530
2531
2532
2533
2534
2535
2536
2537
2538
2539
2540
2541
2542
2543
2544
2545
2546
2547
2548
2549
2550
2551
78
332,000
Starting 1966
2010
Unit : Million of Thai Baht
Disbursement 1966-2010
2510
2511
2512
2513
2514
2515
2516
2517
2518
2519
2520
2521
2522
2523
2524
2525
2526
2527
2528
2529
2530
2531
2532
2533
2534
2535
2536
2537
2538
2539
2540
2541
2542
2543
2544
2545
2546
2547
2548
2549
2550
2551
2552
2553
380
504,884
Starting 1967
2010Unit : Million of Thai Baht
Loan Outstanding 1967- 2010
4,154 1,683
7,822 6,008 5,586 2,918 1,765
73,635 73,557
45,911 48,871 54,482 62,822
77,718
799,056750,613764,945
686,218
588,184566,088501,932
456,021
517,216533,702
623,396691,388 676,978
721,338
-
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Fy 2005 Fy 2006 Fy 2007 Fy 2008 Fy 2009 Jun-10 Oct-10
Net Profit Capital Assets Liabilities
Financial Status Unit : Mil. Baht
Financial RatioFy 2006 Fy 2007 Fy 2008 Fy 2009 Jun-10 otc 2010
1) อั�ตราส่�วนส่าคั�ญทางการเง�นFinancial Ratio
Retum on Asset (%) ROA 0.55 0.97 0.94 1.10 0.22 0.53
Return on Shareholders' equity (%) ROE 6.16 10.81 10.24 11.39 2.29 5.49
Debt/ Equity Ratio 10.27 10.17 9.86 9.57 9.3 9.34
Loan/Deposit Ratio 0.86 0.87 0.82 0.79 0.83 0.83
Capital Adequacy Ratio 10.83 13.0 13.67 13.81 13.03 12.63
2) อั�ตราการเต�บโตGrowth Rate
Assets (%) 12.78 3.9 16.76 11.47 (1.87) 4.46
Liabilities (%) 13.42 3.19 16.64 11.07 (2.08) 4.33
Loans (%) 6.32 4.81 6.83 5.22 3.72 7.69
Deposits (%) 15.12 3.63 13.84 9.66 (1.80) 2.47
Item
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
1. Risk Management for Farmer Clients 1.1 Weather Index Insurance
3,194 insured farmers in 7provinces
Planting areas 60,688 rai*
Insured fund 72.143 Mil. Baht
1,158 insured farmers in 16 districts of Khon-Kaen province
Planting areas 8,040 rai
Insured fund 16.080 Mil. Baht
As of Oct 31,2010
Premium 6.069 Mil. Baht
Indemnity 4.326 Mil. Baht
Premium 0.746 Mil. Baht
Indemnity 0.119 Mil. Baht Streamline for setting up Agricultural Alleviation Fund
First crop paddy in Year 2010Collaboration with Sompho
Japan Insurance Co.Ltd
Maize in Year 2010 Collaboration with WB+General Insurance Assoc.
* 1 ha = 6.25 rai
1. Risk Management for Farmer Clients 1.2 Assistance for flooded farmers
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
Nov 9, 2010
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
5 Steps of welfare system given to Thaweesuk members
Protection amount not over 100,000 Baht in case of dying of accident
New born fee for 2 babies with 500 Baht each
Funeral fee in case of dying of illness not over 10,000 Baht
Compensation fee for medical treatment in case of accident not over 800 Baht
Be able to use 30% of savings as loan collateral
3. Knowledge Development and Strengthening Farmer Clients and Communities
3.3 Community Bank
Target: Credit provision to 300,000 clients, 6,000 Mil. Baht
Performance as of Oct 31, 2010
1,790 clients, amounting 36 Mil. Baht
Provide opportunities for low income groups accessible to formal source of fund
Village Financial Advisor
To finance organizations in community i.e village funds, rural financial institutions or savings groups etc.
driven by
Plan/Government-Secured Loan Projects
1. Informal Debt Solving Scheme
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
2. Households Financial Advisor Project
1. Informal Debt Solving Scheme
Registered farmers : 637,098
Loan outstanding 67,708.59 Mil. Baht
No. of farmers using BAAC loans : 354,715
Credit extended 26,148.92 Mil. Baht
As of Sep 30,2010
Train farmers in 289 Learning Centers
Train Living Plan Course to 34,748 farmers
Train Income Generation Course 8,063 farmers
2. Village Financial Advisor Project
Target : 26,000 clients covering 26,000 villages
Check household financial health
Provide consultancy service
Render financial service
Duties
**To train advisory knowledge in finance to 650 volunteer advisors in 13 provinces by November 2010
3. Rehabilitation and Debt Suspension for Poor and Small Farmer Project
Participating farmers : 206,709
Phase 1: Living Plan Course 206,709 farmers
Phase 2 : Income-Generation Course
192,175 farmers
Phase 3 : Selection Course 6,244 farmers
Project completion as of March 31,2010
No. of trained farmers
4. Agricultural Products Pledging Project, production crop year 2008/2009
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
** Fy 2009/2010 The Project is changed to the Farm Income Guarantee scheme
As of Oct 31,2010
Commitment Balance 66,806 Mil. Baht
5. The Farm Income Guarantee Scheme
5.1 The Farm Income Guarantee Scheme, crop year 2009/2010
Crop Registered farmers in community meeting
Contracted farmers
Farmers received compensation
Persons Persons PersonsAmount
(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 2,434Second crop
paddy832,368 825,033 782,794 18,404
Total 5,088,391 4,917,650
4,738,971
54,902
As of Oct 31, 2010
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 5,270.98 mil. Baht
Financing Microenterprisesunder BAAC’s operations
• Defined by loan size(≤ THB 50,000)• 2 Types of microenterprises – Entrepreneurs
and Community enterprises
•
The Importance of Microenterprises
• Creating jobs • Generating incomes• Creating value add to primary products• Income distribution• Promoting and sharing of knowledge
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
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
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
Factors Determining Interest Rates
• Characters 15 points• Performance 15 points• Credit records 20 points• Collateral 25 points• Project feasibility 25 points
Financing Community Enterprises(CMs)
• Credit plus• Strengthening moderate CMs• Assisting in establishing new CMs in
cooperation with related government agencies
• Applying the King philosophy of Sufficiency Economy as a guideline of operations
• Marketing linkage
Thank you for your attention
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