Despite the Council of State's opinion that the Finance Ministry can proceed with the 130-billion-baht borrowing plan, banks remain concerned about the legitimacy of the deal.
The loans are expected to be ready for draw-down on Feb 4, delayed from the original date of Jan 31, the source said.
The letter was just sent out to 32 financial institutions to invite them to participate in the bidding, so an auction yesterday would have run behind schedule.
The ministry aims to raise 20-40 billion baht in loans from each auction to make payments to farmers who pledged paddy under the rice pledging scheme for the 2013-14 main crop.
The caretaker government wants to secure bridge financing from local banks to pay farmers before letting the state-owned Bank for Agriculture and Agricultural Cooperatives (BAAC) issue bonds to be guaranteed by the Finance Ministry to repay the short-term loans.
Since the start of the current main crop in October, about 10 million tonnes of paddy has been sold to the government, while the state-backed farm bank has already paid about 50 billion baht to farmers.
The upshot is that 1 million farmers with a combined pledging amount of 100 billion baht remain unpaid, and there is insufficient liquidity to pay this group at the moment.
Moreover, the BAAC estimates that the total pledging value could be 190 billion baht when the current main crop ends in late February.
The Finance Ministry decided to proceed with the 130-billion-baht borrowing plan after the Council of State ruled the borrowing constitutional because it would not add a new debt burden. The ministry plans to transfer budget intended for infrastructure to pay farmers.
BAAC executive vice-president Somsak Kangteerawat said the bank as of yesterday had a mere 3 billion baht left over for payments.
The funds derived from Commerce Ministry rice sales, he said.
Mr Somsak also disputed a local media report that the BAAC has made payments only in the Pheu Thai Party's main areas of support such as the northern provinces, saying payments are made based on the order of the invoices.
An unnamed source in finance circles said the banks are still worried about whether the caretaker government has a mandate to proceed with the borrowing, which could be risky for banks taking part in the auction.