BoT seeks to allay rice loan fears

The Bank of Thailand has found no evidence of unusual money withdrawals this week, despite media reports that depositors have pulled more than 9 billion baht from three banks over fears their money could be used to finance the government's rice-pledging scheme.

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Salinee Wangtal, assistant governor of the Central Bank, said the bank’s monitoring systems had found no reports of unusual money withdrawals that were cause for concern.

She made the comments in response to media reports that around six billion baht from two-state run banks and three billion baht from a commercial bank had been withdrawn within the space of a week.Anti-government protesters had speculated that the state-run Government Saving Bank and Krungthai Bank could be sympathetic to lending the caretaker government money to finance the beleaguered rice scheme. TMB Bank, which used to be state-run but is now a commercial operation, was also implicated as a potential source of funds for the pledging programme. However, all three have denied that they plan to offer loans to finance the scheme. 

The caretaker government now owes farmers for more than 100 billion baht for rice pledged under the initiative.

Ms Salinee insisted that commercial banks in Thailand are still performing well, having generated combined profits of 220 billion baht in 2013 as banks.

The non-performing loan average for Thai banks stands at 2.4% of total outstanding loans, which is also normal, she said. A non-performing loan is a loan that is in default or close to that point. The Thai banking system also has the highest allowances for doubtful debt in the world, at 3.8% of outstanding loans, she added. Doubtful debts are those debts that banks are unlikely to be able to collect.

Ms Salinee said the central bank projected that loan extensions will grow by 8-10% this year, which is in line with economic growth but lower than the 11% loan extension growth seen in 2013.

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