The Finance Ministry is mulling the option of increasing the capital of the state-run Bank of Agriculture and Agricultural Cooperatives (BAAC) by 10 billion baht, before the government borrows from the bank to fund the digital wallet scheme.

Deputy Finance Minister Julapun Amornvivat said today that borrowing from the BAAC can be done legally and it is also within the jurisdiction of the Finance Ministry, as the bank has a liquidity surplus.

He noted, however, that it is also important for the government to consider the financial stability of the bank. As such, increasing the capital reserves of the bank, through the issuance of bonds, may be necessary to ease the financial burden.

The BAAC is reportedly supportive of the digital wallet scheme, but it needs assurances that its support is not illegal and will not impact the bank’s financial stability.

BAAC staff, though, are divided. One faction favours lending money from its reserves to fund the scheme, which will earn more interest than ordinary lending, while the other faction fears default by the government and that the lending may not be in line with the objectives of the bank.