Villagers asked to repay government loans

[boisian]

seeking verification.....

8 years ago my gf's mother borrowed 30,000 thb from a government scheme. Apparently a pool of 1million thb was made available to each village from the gov't at the "cheap" rate of 8% (I guess this was the Shinawatras purchasing political capital)

So yesterday the council held a meeting informing villagers that due to all the political problems the gov't require the loans to be paid back......

http://www.villagefund.or.th/index.aspx?pageid=433&parent=0

the Million Fund news is somewhere in the above thai page?

anyone heard of this dilemma?

thanks

[Briggsy]

Is it guaranteed by a land document?

[WilliamCave]

So now the farmers need to pay that back first time I heard of it.

The need to pay much more than that , tractors cars etc etc

[Totster]

I find it a little strange, in our village they have just released more money to be borrowed under the 1 million baht per village scheme.

totster

[khwaibah]

My wife just confirmed BACC has put this request out this past week.

[boisian]

Is it guaranteed by a land document?6

From what I can gather, no land document guarantee. Do you ask because a land guarantee was required to access the loans or because without a guranatee there is no pressure to pay back?

The land the mother was on 8 years ago has been sold. The land they live on now is my GF sisters place and was purchased 6 years ago.

Totser, when was the money released in your village? last year? Apparently this is because of the current political hooha, but I am suspicious of the timeframe....need to pay back in 1 week.

I am telling the GF to do a bit more research other than accept her mothers advice that this came out of the town meeting last night. How can gov't give a weeks notice to pay back a loan? Weird.

edit - thanks khwai for the confirmation - did you get a timeframe?

Edited March 2, 2014 by boisian

[krisb]

I have heard of it.

What I know is each village and villager was able to borrow cash, using each other as guarantors.So individuals borrowed amounts from around 20k. Thaksins idea.

The idea was to start businesses, equipment etc, but obviously that never or rarely happened, unless I missed them. Not sure how other villages went?

Paying the loan back by the due date was part of the loan contract I would have assumed, like any loan. Now the govt wants the cash back sooner?

Can they do that?

Edit, wifes village paid their's back maybe 6 months ago now.

Edited March 2, 2014 by krisb

[khwaibah]

I have heard of it.

What I know is each village and villager was able to borrow cash, using each other as guarantors.So individuals borrowed amounts from around 20k. Thaksins idea.

The idea was to start businesses, equipment etc, but obviously that never or rarely happened, unless I missed them. Not sure how other villages went?

Paying the loan back by the due date was part of the loan contract I would have assumed, like any loan. Now the govt wants the cash back sooner?

Can they do that?

Edit, wifes village paid their's back maybe 6 months ago now.3 years back when th

3 years back when the 17 baht per kilo rice scam started the first farmers in our area that received their checks rushed down to cash it. There is only one bank that is authorized to do this, the BACC,the same bank that most farmers get loans from. So these first are ready in hock for 250,000 baht and have already defaulted on their loans. They go to this bank to cash the check for 100,000 baht and guess what, the banks says thank you, you now only owe 150,000 baht. The bank is correct BUT the scam becomes apparent. All the other farmers got wise and those that owed money went for the fair market price. The BACC depends on the Interim GVT for money and they can only pay out when they have it. They trying everything they can do to legally pay out but they are broke. My wife number in line was originally 1511 for payment, Friday it was 952 she has been waiting fro November.

Edited March 2, 2014 by khwaibah

[Totster]

Totser, when was the money released in your village? last year?

2 days ago. (this is the second lot, first was 3 years or so ago)

totster

[boisian]

krisb, did they pay interest for a period then a lump sum repayment? or did they pay back in installments?

My GF is worried she will be the only one in the village not on time to pay back.

So every year they need to pay back in full but can promptly reborrow.

Apparently this year they are not permitted to reborrow.

The interest rate for this gov't loan seems to be over the top as there is the 8 % interest then the annual mafia short term money lending margin of 1500thb to borrow 30000 for a day or two. My GF family are certainly worse than I am about managing finances (and that means pretty bad financial management)

[473geo]

My understanding is the money was made available, the village occupants can apply for a loan and pay the loan back annually, if the loan money was not recovered the loan would not be available the following year. I know repayment is matter of pride for the villagers as of course all the neighbours will know if you did not make the repayment and jepordise the arrangement. The borrowing usually repaid when the rice crop revenue arrived, then an application to borrow again for the coming years expenses.

This is how I witnessed the program working, there is also a similar facility available through the BAAC if they purchase your rice in advance of payment

I'm sure the redistribution has taken place already this year in the village

[boisian]

thanks geo.

The kid was cleaned up by a motorbike and went in to hospital early this year or late last year, and at that time the ex hubby / father was paying back to borrow again - he is in the same area so there was an earlier redistribution. I'll enquire.

[Pormax]

Nothing like that is happening in my village.

Many of the villagers have loans with the Farmers's Bank which they have to pay back each year with the interest.

Then within a week they can go back and borrow the money again, in some cases a bit more than last time if their credit rating is good..

I know of 6 people who have done this in the last month.

It would be strange to call in the loans as this is how the banks make their money.

[barrybankruad]

My wife over the past year or so has provided what I like to refer to as 'bridging loans' to various village residents. This usually involves providing money (usually 100K) to the borrower. They both go to the BACC or as they refer to it here the 'Credit Union' (although it isn't) where my wife withdraws the cash which is then promptly handed back to the bank. The loan is then remade to the original borrower, very often on the same day. The borrower pays the interest that has accumulated on the past loan and pays my wife for the privilege of borrowing the money, even though no cash actually changed hands. Apparently she has done this so often that there is one special teller she go straight to and gets dealt with straight away.

The borrower now has a years grace (or whatever subject to the loan conditions) but eventually will have to go through the process all over again If they cannot save enough funds to repay the loan.

Edited March 2, 2014 by barrybankruad

[TerryLH]

The one million per village scheme was set up a long time ago. It's supposed to be used as a revolving fund. Not positive, but I think the government has added more funds since the original start up years ago.

The village would get the money, and decide who gets how much. In theory, there should be more money available for loaning out each year.

Loans + interest are due to be re-payed annually, then the money is available to be loaned to someone else - or back to the same borrower (if the village decides they are a good risk).

The amount each borrower can get is generally small, at least in the village we use, and they don't always get the whole amount they ask for.

Although there has been some favoritism involved, the scheme seems to work well.

[pianoman]

krisb, did they pay interest for a period then a lump sum repayment? or did they pay back in installments?

My GF is worried she will be the only one in the village not on time to pay back.

So every year they need to pay back in full but can promptly reborrow.

Apparently this year they are not permitted to reborrow.

The interest rate for this gov't loan seems to be over the top as there is the 8 % interest then the annual mafia short term money lending margin of 1500thb to borrow 30000 for a day or two. My GF family are certainly worse than I am about managing finances (and that means pretty bad financial management)

I think that this program may help to explain what a Farang freind of mine has been involved in several times over the past few years...

His wife has asked him to "Loan" anywhere from 200,000 to over 600,000 baht to the "Village" for just a few days to a week... For his "Loan" he receives 2% or 3% and has always been repaid within a few days... I assume that they are wanting enough to pay off the previous years Loans so that they can show the loans all "Paid" so that they can qualify for the current years funds..

Pianoman

[SlyAnimal]

Geo & Pianoman have it pretty much on the button, at least as far as I understand the scheme.

Taksin brought in the 1 Million Baht scheme, which many people REALLY appreciate, whereby a member of the village/moo baan was assigned to look after 1 Million Baht, which could be used for microfinance of village members. Not large loans, but maybe upto around 20,000 Baht, although it was at the discretion of the person assigned to take care of it. This person was voted in by the villagers, so is usually someone who they all believe is honest and responsible.

Each year the loan needs to be repaid, I think interest is also charged on it, although I'm not sure of that. If interest is charged, it's very very low. When the loan is repaid, the amount can be borrowed again straight away.

Many villages take a great amount of pride in their microfinance system, although some (My own area included), have had the money disappear due to the "honest and responsible" people who were assigned to take care of it, actually being corrupt or irresponsible.

As mentioned previously, when the money needs to be paid back each year, the villagers often don't have the money to repay the loan, and don't want to lose face etc with the village, so need to borrow money, just to show to the authorities. They are then able to pay the money back to their creditors a few days later, along with a 1 - 2% premium. It's of course risky for the people lending money, but also quite profitable.

[JesseFrank]

Geo & Pianoman have it pretty much on the button, at least as far as I understand the scheme.

Taksin brought in the 1 Million Baht scheme, which many people REALLY appreciate, whereby a member of the village/moo baan was assigned to look after 1 Million Baht, which could be used for microfinance of village members. Not large loans, but maybe upto around 20,000 Baht, although it was at the discretion of the person assigned to take care of it. This person was voted in by the villagers, so is usually someone who they all believe is honest and responsible.

Each year the loan needs to be repaid, I think interest is also charged on it, although I'm not sure of that. If interest is charged, it's very very low. When the loan is repaid, the amount can be borrowed again straight away.

Many villages take a great amount of pride in their microfinance system, although some (My own area included), have had the money disappear due to the "honest and responsible" people who were assigned to take care of it, actually being corrupt or irresponsible.

As mentioned previously, when the money needs to be paid back each year, the villagers often don't have the money to repay the loan, and don't want to lose face etc with the village, so need to borrow money, just to show to the authorities. They are then able to pay the money back to their creditors a few days later, along with a 1 - 2% premium. It's of course risky for the people lending money, but also quite profitable.

That is also how I know the scheme, it was Thaksins first election stint in 2001, he spent 77 Billion baht on it ( 77000 Villages/1 million ) and the paople thought it came out of Thaksins own pocket. Many of the village headman drove a new fortuner shortly after.

[473geo]

Most of the village head men I knew drove the Mighty X or Isuzu, never saw new either, (not until the recent rice scheme) headman is elected, so not much chance to benefit, and a big risk to exploit! The larger families in the villages may not have much left after taking care of the general welfare of their large families, but their vote means they at least carry huge influence and this in turn encourages they are not forgotten.

A million baht is not a lot when there could be 50 applications for a loan doesn't leave much to buy the 'fortuner' annual revenue at 3% is only 30k

[Trickcyclist]

Are the inhabitants of 77,000 villages going to lose their land?

Could be the biggest land grab since since Christopher Columbus landed in Hispanola in 1492.

And the beneficiary will be?

Answers on a postcard please.

[Issangeorge]

" Thaksins first election stint in 2001, he spent 77 Billion baht on it ( 77000 Villages/1 million ) and the paople thought it came out of Thaksins own pocket. Many of the village headman drove a new fortuner shortly after."

A little exaggeration the Fortuner wasn't even out until 2005, and all the headmen in my area seem far more modest than that, most driving used vehicles.

Sent from my i-mobile IQ 6 using Thaivisa Connect Thailand mobile app

Edited March 7, 2014 by Issangeorge

[isanbirder]

Geo & Pianoman have it pretty much on the button, at least as far as I understand the scheme.

Taksin brought in the 1 Million Baht scheme, which many people REALLY appreciate, whereby a member of the village/moo baan was assigned to look after 1 Million Baht, which could be used for microfinance of village members. Not large loans, but maybe upto around 20,000 Baht, although it was at the discretion of the person assigned to take care of it. This person was voted in by the villagers, so is usually someone who they all believe is honest and responsible.

Each year the loan needs to be repaid, I think interest is also charged on it, although I'm not sure of that. If interest is charged, it's very very low. When the loan is repaid, the amount can be borrowed again straight away.

Many villages take a great amount of pride in their microfinance system, although some (My own area included), have had the money disappear due to the "honest and responsible" people who were assigned to take care of it, actually being corrupt or irresponsible.

As mentioned previously, when the money needs to be paid back each year, the villagers often don't have the money to repay the loan, and don't want to lose face etc with the village, so need to borrow money, just to show to the authorities. They are then able to pay the money back to their creditors a few days later, along with a 1 - 2% premium. It's of course risky for the people lending money, but also quite profitable.

That is also how I know the scheme, it was Thaksins first election stint in 2001, he spent 77 Billion baht on it ( 77000 Villages/1 million ) and the paople thought it came out of Thaksins own pocket. Many of the village headman drove a new fortuner shortly after.

This is quite right. The books are made up in March, I think, and at this time all the money has to go back to BACC (OMSIN was also involved). If this is done, it can be drawn out again a week or so later. Land ownership is not involved, nor is the need to get money to pay out on the rice pledging scheme.

Last year, I went down to the bank (OMSIN in this case) with two pu-yai-baan and a large sum of money in cash. One of the pu-yai-baan had a ledger with all the amounts owned by his villagers in it, which he was unable to balance. Panic all round! Finally we sorted everything out, and everybody went off happy.

Edited March 7, 2014 by isanbirder