Thai rice-pledging scheme: Bankers' group calls for clarity

[webfact]

RICE-PLEDGING SCHEME
Bankers' group calls for clarity
The Nation

BANGKOK: -- The Thai Bankers Association yesterday urged the caretaker government to urgently tackle public confusion over its latest policy on making payments to rice farmers, which has led to massive deposit withdrawals from the Government Savings Bank.

Deputy PM Kittiratt Na-Ranong told Channel 3 that GSB's liquidity remained stable despite the withdrawals. He insisted that inter-bank lending - such as the GSB's loan to the Bank for Agriculture and Agricultural Cooperatives (BAAC) to cover rice payments - was normal.

However, Twatchai Yongkittikul, secretary-general of the Thai Bankers Association, expressed concern over the volume of customer withdrawals, describing them as massive. Urging the government to clarify the issue, he said the situation was one of confusion and public misunderstanding.

Twatchai said the GSB's inter-bank loan to BAAC could lead to legal problems if the latter directly handed the money to farmers. However, there would be no legal issue if BAAC loaned the money to private firms joining in the rice bidding and allowed the government to repay farmers with proceeds of the stockpile release.

GSB announced that there had been Bt20 billion in net withdrawals yesterday compared to an average of Bt7 billion after long holidays. Yesterday's withdrawals were made mostly by customers dissatisfied with the bank's Bt5 billion loan to the BAAC. The money was to be paid to farmers indebted due to non-payment under the pledging scheme.

The GSB's balance saw deduction of a total of Bt30 billion through withdrawals and closures of accounts, with Bt10 billion in deposits. The activity accounted for around 10 per cent of the GSB's entire liquidity of around Bt200 billion.

A GSB source said the Bt10 billion in deposits were made by state-enterprises that wanted to support the bank. The source did not say whether they wanted to help out with the rice scheme, or problems engulfing the government.

Withdrawals were made mostly in Bangkok, adjacent provinces and the South, GSB chief executive Woravit Chailimpamontri said. The GSB announced a halt to BAAC-bound lending at a press conference at 4.30pm, after Bt5 billion was transferred to the BAAC, from a ceiling of around Bt20 billion it aimed originally to lend.

GSB branches in several provinces were packed yesterday with customers nervous over the rice scheme. Some were seen withdrawing their savings out of fear their money would be used to help pay government debts to the farmers.

GSB staff at several branches dressed in black in protest at the bank's decision to be part of the government's struggling efforts to repay the Bt130 billion its has long owed the rice farmers.

In Satun, the bank's administration hung a banner on the front that read: "The bank will not use customers' savings to repay the rice-pledging scheme."

Some customers remained confident the bank would not use their savings to pay farmers. Some were seen yesterday depositing money into their accounts.

Manager Sompob Panthong said the bank had assured customers it would not use their savings. "The customers understand the situation," he said.

The bank's Krabi branch saw many customers withdrawing money for fear their savings would be used to help fund the scheme. The branch's manager Patcharee Narawisut said many customers had turned up to withdraw their savings. "All I could do was to tell them not to panic. I don't know the exact amount withdrawn. I had already informed the provincial bank's administration." The number of withdrawals yesterday was higher than usual, she said.

Some GSB branches in Chiang Mai and Buri Ram reported there were no unusually high withdrawals or closure of accounts.


-- The Nation 2014-02-18

[Robby nz]

A GSB source said the Bt10 billion in deposits were made by state-enterprises that wanted to support the bank. The source did not say whether they wanted to help out with the rice scheme, or problems engulfing the government.

So there is where most of the 10 billion of deposits came from.

Could it be on orders from the minister of white lies.?

After all there was a report recently that said state enterprises had been ordered to transfer their accounts to the BAAC.

[Thai at Heart]

<deleted>?

How the hell can all this money flow around the banking system and NO ONE knows?

[T_Dog]

Very interesting seeing how social media is causing a faster run on a bank. And didn't the auditor-general say there was no money to pay potential loans back two weeks ago? Asking for clarity doesn't mean it happens.

[NongKhaiKid]

Clarity from this government ?

That really would be a first.

[NongKhaiKid]

Clarity from this government ?

That really would be a first.

[ChrisY1]

With the high interest that would need to be repaid to lenders......there's an opportunity for the connected wealthy to take advantage.....transparency in this debacle will not be forthcoming.

[thesetat2013]

No matter how they try to explain that the loans to the BAAC are legitimate the people have lost trust in the GSB. Their initial lie that this money was not to aid BAAC in paying the rice scheme will not be forgotten.

Their requests for the gov to help explain this loan will not be believed Since nobody has faith in what YL and the PTP say anymore.

So the GSB lied to help the gov. Its only normal for thw GOV to lie to help the GSB.

Question:

How can these banks hang banners saying this money is not for paying the debts to the rice scheme when even this article even states that is what it will be used for?

I know already the article contradicts itself many times even trying to change how that money will be used for auctioin but they dont need money in the bank when auctioning the rice. So that is clearly a lie.

Sent from my GT-S5310 using Thaivisa Connect Thailand mobile app

Edited February 18, 2014 by thesetat2013

[chainarong]

Clarity from this government ?

That really would be a first.

Can U trust the PTP in what they ever say NKK

[NongKhaiKid]

Clarity from this government ?

That really would be a first.

Can U trust the PTP in what they ever say NKK

Absolutely and I'll stake everything I have in my GSB account

[CWMcMurray]

Regardless of how this proceeds with GSB... I think it makes a very clear message to commercial banks

I don't think any will want to get involved or support with any loans to the gov any time soon

Sent from my iPhone using Tapatalk

[tomyummer]

It's a bad sign when employees within the bank itself don't agree with the loan. No confidence whatsoever.

[bushwacker]

Interesting that some employees of the Government owned GSB, who are government employees, wore black in protest of the decision of the bank to help the Government.

I was in the GSB bank yesterday taking out money, because, I suspect that the family will need to eat in the months to come, and nobody was wearing black. The tellers were keeping track of large sums of money being withdrawn on the back of a scrap piece of paper. There were no smiles and everybody looked very serious. Any customer that started to talk about the problem was politely taken into the back room for a cup of tea before they could start a panic. INTERESTING.

[rickirs]

While TBA's concerns seem somewhat innocous or nebulous as only bankers can think, their solution is simply genius - "there would be no legal issue if BAAC loaned the money to private firms joining in the rice bidding and allowed the government to repay farmers with proceeds of the stockpile release." That plan should settle farmer concerns of further delay and politician concerns of anyfiscal mismanagement. AND BAAC gets a larger "handling" fee than if it alone handled the payments.

[JesseFrank]

While TBA's concerns seem somewhat innocous or nebulous as only bankers can think, their solution is simply genius - "there would be no legal issue if BAAC loaned the money to private firms joining in the rice bidding and allowed the government to repay farmers with proceeds of the stockpile release." That plan should settle farmer concerns of further delay and politician concerns of anyfiscal mismanagement. AND BAAC gets a larger "handling" fee than if it alone handled the payments.

Only problem with your cunning plan is that there are no interested private bidders.

[NeverSure]

Again, the problem is that the rice stock is the collateral for the money the BAAC put up to buy the rice. It's on the books' debit side as collateral at about 50% more than what the rice was worth when the government bought it above market price.

If the government sells that rice for market value, there won't be nearly enough to pay off those bogus loans. The bank will have to write off as losses the loans on the credit side of the ledger and the BAAC will be bankrupt.

In short, the BAAC is holding the bag for the excess above market value that was paid for the rice and selling the rice would cause them to have to put real numbers (mark to market) on their books. As long as they don't sell the rice, the bank which is owned by the government can continue to pretend that the rice is worth what they paid for it.

The BAAC is belly up.

Edited February 18, 2014 by NeverSure

[Suriya4]

Interesting that some employees of the Government owned GSB, who are government employees, wore black in protest of the decision of the bank to help the Government.

I was in the GSB bank yesterday taking out money, because, I suspect that the family will need to eat in the months to come, and nobody was wearing black. The tellers were keeping track of large sums of money being withdrawn on the back of a scrap piece of paper. There were no smiles and everybody looked very serious. Any customer that started to talk about the problem was politely taken into the back room for a cup of tea before they could start a panic. INTERESTING.

GSB is disgrace and should close down.

[robblok]

While TBA's concerns seem somewhat innocous or nebulous as only bankers can think, their solution is simply genius - "there would be no legal issue if BAAC loaned the money to private firms joining in the rice bidding and allowed the government to repay farmers with proceeds of the stockpile release." That plan should settle farmer concerns of further delay and politician concerns of anyfiscal mismanagement. AND BAAC gets a larger "handling" fee than if it alone handled the payments.

Yes genius.. but to be honest the government does not want to sell the rice. The more they sell the higher the loss on paper is. There is less loss on paper if they just loan money.

More loss on paper means that a higher part of the budget (loans are not budget just liquidity) has to allocated and less money is left for the other departments that need money (for the government to steal from too) They want to maximize their share of the money they steal. So I doubt they would go for that option.

The whole setup from this scam was that on paper it would cost no money so max budgets could go to other departments where they also stole loads of money.

[RubbaJohnny]

So next headline

BANKS ASKING FOR CHARITY

One of the statements said theGSb did not know what the loan would be used for ,a very interesting criteria to assess risk.

Only a matter of time when some bright populist decides to bail us in as so many mus have basically dormant 400 or 800k for visas.

Hardly need a law to ask banks to identify foreign names,or those accounts opened with a foreign passport..This and hike in the departure tax.

I think the cheap peaceful ,friendly LOS which so many of us recall only a decade ago has succombed to the debt consume,envy model.