Topics of Discussion

About BAAC Historical Background Structure and Service Network Products and Services Operating Funds BAAC’s operations as of 31 March 2010 Financing microenterprises

Vision

• “To be a secured rural development bank with modern managerial technology focusing on the uplift of small-scale farmer’s quality of life” ”

Mission

1. To render integrated credit services to enhance farmers’ opportunity for effectively improved productivity;

2. To streamline social development regarding agriculture-based learning for the improved quality of life of farmers so that they will be valuable human resource assets and worthy members of society;

3. To administer funds in such a manner that the cost is kept at the appropriate level reflecting the bank’s key mission with emphasis on liquidity and stability;

4. To develop new areas of services to effectively and productively meet farmers’ needs on the strength of high-caliber staff with sound judgment.

Historical BackgroundEstablish in 1966

As a state enterprise under the jurisdiction of MOF to replace the

Bank for CooperativesIn response to the financial needs of

farmers who during that period depended largely on local money

lenders

Reducing the roles of non-formal financial sectorIntroducing innovative financial mechanism by adopting of joint liability group as a collateral for small scale farmers

1966-1976 Facilitating credit services by introducing cash credit-line

Offering credit in kind for providing farm-input

Launching of credit production and marketing linkage

Introducing crop pledging scheme

1976-1986

Scaling-up credit provision to small-scale farmers

Launching farm related credit

Establishing Agricultural Marketing Cooperative(AMC)

1986-1996 Launching non-farm credits, quality of life credits supplement income generating credit

Adoption of Philosophy of sufficiency economy

Enhancing rural community strength

1996-2006

BAAC’s Development

BAAC Development To promote the improved quality of life of small scale farmers.

To extend credit services to persons, groups of persons, entrepreneurs, village or community funds, organizations aiming to promote the career of farmers and communities, and all types of cooperatives.

To extend credits to promote the efficiency production of client farmers.

2006 – Present

Board of Directors

Executive Vice President (Mr.Ennoo Suesuwan)• Personal Loan Department• Institutional Loan Departmen• Office of Rural bank project

Executive Vice President (Mr.Boonchuey Chaidamrongchai)• Government Secured Loan Department

Executive Vice President (Mr.Pornchai Limpapas)• Strategic Product Markting Department• Debt Management Line

Executive Vice President (Mr.Isorn Ekpisankit)• Customer and Rural development Department• Office of customer and Product Development

Executive Vice President (Mr.Vinai Kruetreepradit)• Deposit Services Department• Office of Electronic Banking

Audit Department

Customer and Product Development GroupSenior Executive Vice President (Mr. Ennoo Suesuwan)

• Management Department• Offrice of Public Relation and Organization Communication

Risk Management CommitteeAudit Committee

President

Branch Adminisitration GroupSenior Executive Vice President

(Mr. Pramote Nontakote)

Organization Strategy GroupSenior Executive Vice President

(Mr. Somchai Aumphan)

Accounting, Treasuty and InformationSystem Group Senior Executive Vice President (Mrs. Poonsook Musiklad)

Executive Vice President (Mr.Boonthai Kaewkhuntee)Office of BAAC Northern Region• Branch Administration (Upper Northern Region)• Branch Adminstration (Lower Northern Region)

Executive Vice President (Mr.Pornchai Limpapas)Office of BAAC Northeatern Region• Branch Administration (Upper Northeastern Region)• Branch Administration (Lower Northeastern Region)

Executive Vice President (Mr.Isorn Ekpisankit)Office of BAAC central and Eastern Region• Branch Administration (Central Region)• Branch Administration (Eastern Region)

Executive Vice President (Mr.Boonchuey Chaidamrongchai)Office of BAAC Southern and Western Region• Branch Administration (Western Region)• Branch Administration (Upper Southern Region)• Branch Administration (Lower Southern Region)

Executive Vice President (Mr.Adul Kanchanwat)• Policy and Strategy Department• Human Resources Department• Office of Organization and System Development• Office of Research BAAC

Executive Vice President (Mr.Prayong Tenbee)• General Administration Department• Office of Property Management and Building• Legal Affair Department

Executive Vice President (Mr.Kamolpant Asaves)• Accounting Department• Treasury Department• Bank and International Business Department• Risk Mangement Department

Executive Vice President (Mr.Vinai Kruetreepradit)• Information Technology Research Department• Office of Information Technology Program

Mr.Luck WajananawatSenior Executive Vice President (Mr.Promote Nontakote)

Service Network

75 Provincial branches

1,044 branches and sub-branches

988 ATMs

1,043 Farmers’ Institutions(Memberships 1.64 mil.)

Individual Clients4.61 mil.

2 Agricultural Central Markets

Products and Services

• Credit services • Wide rage of

agricultural loans and non-farm loans

• Loans for quality of life• - education• - medical care• - others

• Banking Services• Wide range of Savings

Thaweechoke• Thaweesin• Money transfer• Account payment• Currency Exchange

2509

2510

2511

2512

2513

2514

2515

2516

2517

2518

2519

2520

2521

2522

2523

2524

2525

2526

2527

2528

2529

2530

2531

2532

2533

2534

2535

2536

2537

2538

2539

2540

2541

2542

2543

2544

2545

2546

2547

2548

2549

2550

2551

178

12,612

Starting 1966

2010

Number of staff 1966-2010

2509

2510

2511

2512

2513

2514

2515

2516

2517

2518

2519

2520

2521

2522

2523

2524

2525

2526

2527

2528

2529

2530

2531

2532

2533

2534

2535

2536

2537

2538

2539

2540

2541

2542

2543

2544

2545

2546

2547

2548

2549

2550

2551

1,890

6,094,542

Starting 1966

2010

Unit : Househol

d

Number of clients 1966-2010

2509

2510

2511

2512

2513

2514

2515

2516

2517

2518

2519

2520

2521

2522

2523

2524

2525

2526

2527

2528

2529

2530

2531

2532

2533

2534

2535

2536

2537

2538

2539

2540

2541

2542

2543

2544

2545

2546

2547

2548

2549

2550

2551

143

764,945

Starting 1966

2010Unit : Million of Thai Baht

BAAC Operating Fund 1966-2010

Operating Fund

Deposit 658,460

Mil. Baht (82%)

Others 19,297

Mil. Baht (2%)

Shareholders' Equity

77,718 Mil. Baht (10%)Borrowings 43,581

Mil. Baht (5%)

As of March 31, 2010 As of Oct. 30, 2010

764,945 Mil. Baht 799,056 Mil.Baht

Deposit 642,499

Mil. Baht (84%)

Others 26,423

Mil. Baht (3%)

Shareholders' Equity

73,557 Mil. Baht (10%)

Borrowings 22,466

Mil. Baht(3%)

5%

1,195

642,499

Starting 1975

2010Unit : Million of Thai Baht

Deposits from general public- 2010

2509

2510

2511

2512

2513

2514

2515

2516

2517

2518

2519

2520

2521

2522

2523

2524

2525

2526

2527

2528

2529

2530

2531

2532

2533

2534

2535

2536

2537

2538

2539

2540

2541

2542

2543

2544

2545

2546

2547

2548

2549

2550

2551

78

332,000

Starting 1966

2010

Unit : Million of Thai Baht

Disbursement 1966-2010

2510

2511

2512

2513

2514

2515

2516

2517

2518

2519

2520

2521

2522

2523

2524

2525

2526

2527

2528

2529

2530

2531

2532

2533

2534

2535

2536

2537

2538

2539

2540

2541

2542

2543

2544

2545

2546

2547

2548

2549

2550

2551

2552

2553

380

504,884

Starting 1967

2010Unit : Million of Thai Baht

Loan Outstanding 1967- 2010

4,154 1,683

7,822 6,008 5,586 2,918 1,765

73,635 73,557

45,911 48,871 54,482 62,822

77,718

799,056750,613764,945

686,218

588,184566,088501,932

456,021

517,216533,702

623,396691,388 676,978

721,338

-

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Fy 2005 Fy 2006 Fy 2007 Fy 2008 Fy 2009 Jun-10 Oct-10

Net Profit Capital Assets Liabilities

Financial Status Unit : Mil. Baht

Financial RatioFy 2006 Fy 2007 Fy 2008 Fy 2009 Jun-10 otc 2010

1) อั�ตราส่�วนส่าคั�ญทางการเง�นFinancial Ratio

Retum on Asset (%) ROA 0.55 0.97 0.94 1.10 0.22 0.53

Return on Shareholders' equity (%) ROE 6.16 10.81 10.24 11.39 2.29 5.49

Debt/ Equity Ratio 10.27 10.17 9.86 9.57 9.3 9.34

Loan/Deposit Ratio 0.86 0.87 0.82 0.79 0.83 0.83

Capital Adequacy Ratio 10.83 13.0 13.67 13.81 13.03 12.63

2) อั�ตราการเต�บโตGrowth Rate

Assets (%) 12.78 3.9 16.76 11.47 (1.87) 4.46

Liabilities (%) 13.42 3.19 16.64 11.07 (2.08) 4.33

Loans (%) 6.32 4.81 6.83 5.22 3.72 7.69

Deposits (%) 15.12 3.63 13.84 9.66 (1.80) 2.47

Item

BAAC Plans &Significant Projects

1. Risk Management for Farmer Clients

2. Market Development for Farmer Clients

3. Knowledge Development and Strengthening Farmer Clients and Communities

1. Risk Management for Farmer Clients 1.1 Weather Index Insurance

3,194 insured farmers in 7provinces

Planting areas 60,688 rai*

Insured fund 72.143 Mil. Baht

1,158 insured farmers in 16 districts of Khon-Kaen province

Planting areas 8,040 rai

Insured fund 16.080 Mil. Baht

As of Oct 31,2010

Premium 6.069 Mil. Baht

Indemnity 4.326 Mil. Baht

Premium 0.746 Mil. Baht

Indemnity 0.119 Mil. Baht Streamline for setting up Agricultural Alleviation Fund

First crop paddy in Year 2010Collaboration with Sompho

Japan Insurance Co.Ltd

Maize in Year 2010 Collaboration with WB+General Insurance Assoc.

* 1 ha = 6.25 rai

1. Risk Management for Farmer Clients 1.2 Assistance for flooded farmers

in 53 Provinces, 517,711 Clients

Assistance Measures

Hand-out subsistence bags for 49,630 clients, amounting 9.92 Mil Baht

Donate 1 Mil Baht under the Government-to-People Help Project

Debt Suspension for farmers/interest free 3% per annum, principal 47,090 Mil Baht

9 deceased clients were loan written off, amounting 625,027 Baht

Nov 9, 2010

1. Risk Management for Farmer Clients

1.3 Thaweesuk Fund Oct 31,2010

Number of participating clients : 785,701

Amount of savings 2,135 Mil. Baht

5 Steps of welfare system given to Thaweesuk members

Protection amount not over 100,000 Baht in case of dying of accident

New born fee for 2 babies with 500 Baht each

Funeral fee in case of dying of illness not over 10,000 Baht

Compensation fee for medical treatment in case of accident not over 800 Baht

Be able to use 30% of savings as loan collateral

3. Knowledge Development and Strengthening Farmer Clients and Communities

3.3 Community Bank

Target: Credit provision to 300,000 clients, 6,000 Mil. Baht

Performance as of Oct 31, 2010

1,790 clients, amounting 36 Mil. Baht

Provide opportunities for low income groups accessible to formal source of fund

Village Financial Advisor

To finance organizations in community i.e village funds, rural financial institutions or savings groups etc.

driven by

Plan/Government-Secured Loan Projects

1. Informal Debt Solving Scheme

3. Rehabilitation and Debt Suspension for poor and small farmers Project

4. Agricultural Products Pledging Scheme crop year 2008/2009

5. Farm Income Guarantee Scheme

2. Households Financial Advisor Project

1. Informal Debt Solving Scheme

Registered farmers : 637,098

Loan outstanding 67,708.59 Mil. Baht

No. of farmers using BAAC loans : 354,715

Credit extended 26,148.92 Mil. Baht

As of Sep 30,2010

Train farmers in 289 Learning Centers

Train Living Plan Course to 34,748 farmers

Train Income Generation Course 8,063 farmers

2. Village Financial Advisor Project

Target : 26,000 clients covering 26,000 villages

Check household financial health

Provide consultancy service

Render financial service

Duties

**To train advisory knowledge in finance to 650 volunteer advisors in 13 provinces by November 2010

3. Rehabilitation and Debt Suspension for Poor and Small Farmer Project

Participating farmers : 206,709

Phase 1: Living Plan Course 206,709 farmers

Phase 2 : Income-Generation Course

192,175 farmers

Phase 3 : Selection Course 6,244 farmers

Project completion as of March 31,2010

No. of trained farmers

4. Agricultural Products Pledging Project, production crop year 2008/2009

Crop Pledged Amount(mil. Ton)

Amount (Mil. Baht)

Amount receivable

Pending Reimbursement

(Mil. Baht)

First crop paddy 6.06 67,057

43,659

0.99 8.377

4,402

11.66 22,998

10,266

Total 18.71 98,432

58,327

Second crop paddy 5.47 62,619

41,597

Grand Total 24.18 161,051

99,924

** Fy 2009/2010 The Project is changed to the Farm Income Guarantee scheme

As of Oct 31,2010

Commitment Balance 66,806 Mil. Baht

5. The Farm Income Guarantee Scheme

5.1 The Farm Income Guarantee Scheme, crop year 2009/2010

Crop Registered farmers in community meeting

Contracted farmers

Farmers received compensation

Persons Persons PersonsAmount

(Mil. Baht)

First crop paddy

3,411,838 3,272,875

3,195,820

28,427

398,396 392,521 379,762 5,637

445,789 427,221 380,595 2,434Second crop

paddy832,368 825,033 782,794 18,404

Total 5,088,391 4,917,650

4,738,971

54,902

As of Oct 31, 2010

Loan allocated under SP 2 amounting 40,000 mil. Baht, amount reimbursed 39,513 mil. Baht

Loan allocated under fiscal budget 2011 (second crop paddy) amounting 5,270.98 mil. Baht

Financing Microenterprisesunder BAAC’s operations

• Defined by loan size(≤ THB 50,000)• 2 Types of microenterprises – Entrepreneurs

and Community enterprises

•

The Importance of Microenterprises

• Creating jobs • Generating incomes• Creating value add to primary products• Income distribution• Promoting and sharing of knowledge

Characteristics of BAAC’s Microenterprises

• Very small size of loans• Very small business volume• Lack of managerial skills• Low technology• Lack of access to conventional financial

institutions• Lack of collateral

Financing Microenterprises

• Qualifications– Legal entity– Thai national– At least 1 year of operation and profitable– Venue situated in Thailand– Skilled or accomplished training course(s)– Permanent resident in the area of certain branch

at least 6 months

Financing microenterprises

• Types of loans– Short term loan as working capital– Long term loan for investment

• Interest rate– MLR + 0-5%

• Collateral– Joint liability group– Guarantors– Mortgaged properties

Factors Determining Interest Rates

• Characters 15 points• Performance 15 points• Credit records 20 points• Collateral 25 points• Project feasibility 25 points

Financing Community Enterprises(CMs)

• Credit plus• Strengthening moderate CMs• Assisting in establishing new CMs in

cooperation with related government agencies

• Applying the King philosophy of Sufficiency Economy as a guideline of operations

• Marketing linkage

Thank you for your attention