About 10,000 Village Funds risk going under due to the impact of the Covid-19 pandemic, warns the National Village and Urban Community Fund Committee.
Speaking after a meeting of the National Village and Urban Community Fund Committee chaired by Deputy Prime Minister Supattanapong Punmeechaow yesterday, Natee Klibthong, acting head of the National Village and Urban Community Fund Office, said his office -- the body in charge of the Village Funds -- has been ordered to speed up negotiations with the Government Savings Bank (GSB) and the Bank for Agriculture and Agricultural Cooperatives (BAAC) to help offer a hand in terms of lending to the bankruptcy-threatened Village Funds.
There are 79,604 Village and Urban Funds that have a total of 250 billion baht in revolving funds, with over 13 million members nationwide.
The Village Fund will mark 20 years since its establishment in July, while the government has ambitions to upgrade the funds to community banks through which they can support their own community businesses.
The Village Funds are currently classified into Grades A, B, C and "underperformers". Grade A or B Village Funds are considered to be premium grade in terms of management competency, attractive returns on investment, decent accounting standards and complete information presented in an annual report, as well as providing good care for their members. There are a combined 50,000 Village Funds in Grades A and B, while the number of Grade C funds stands at 20,000. Around 7,000-8,000 funds are classified as underperformers.
Grade A and B Village Funds have the potential to upgrade their own community businesses and community banks, while Grade C funds and underperformers have been ignored over the past several years when it comes to offers of government support, due to their poor management and relatively high bad debt.
The government has allocated a combined 180 billion baht over the past 20 years to support Village Funds.
Of the total ailing Village Funds, 5,680 owe money to the GSB, while 5,000 Village Funds were BAAC's clients.
Mr Natee said his office has scheduled talks with the GSB today to help restructure debts to the ailing Village Funds.
"The government needs to speed up helping those troubled Village Funds. Any delays may lead them to go bankrupt," he said, adding the office will propose GSB help suspend the debt's principal for two years.