Rapid Assessment for Resilient Recovery and ... - GFDRR

too high for the 3 percent interest cap on these loans to be considered fundable
by private banks. If commercial banks only had to use 25 percent of their own
funds, the blended rate would become comparable to usual rates. Better still would
be to focus attention on the loan guarantees, but to design these so that the resulting
risk share is truly attractive to the banks.
See the DRM chapter for recommendations linked to the insurance sector.
Strategy for Medium-Term Recovery and Reconstruction
The main suggestions for the medium-term are linked to SFIs and to microfinance. To deal
with weaknesses enumerated above, the team proposes three main recommendations:
(i) In order to more effectively distinguish between SFIs’ banking role and government
assistance role, it is strongly recommended that transparent agency structures
be established to enable SFIs to respond to disasters (such as the 2011 floods)
through their networks on behalf of the government. SFIs have been the first
responders to most crises in recent years, and are suffering because of it.
Given the uncertainty created in international markets about Thailand’s creditworthiness
following this crisis, it would help the government’s position if it could move
away from the current position of having very significant off-balance sheet public
financing operations, and opt, instead, for a more transparent approach. Splitting
off the operations requiring grants and/or subsidized loans, and having them run
through agencies that are coordinated or overseen by the SFIs, would be a positive
step in this direction. This is in line with the recommendations in the 2011 Modular
Financial Sector Assessment Program (FSAP). 76
(ii) Conduct a broader study of the microfinance sector, to determine whether the
cooperatives and village/urban funds have the capacity and willingness to adequately
provide most of the microfinance needed in the country, or whether introducing one
or several nationwide microfinance institutions would be beneficial. If included in
the recommendations of the aforementioned microfinance study, the government
could subsidize the establishment of a large microfinance institution (possibly the
expansion on an existing NGO program).
(iii)If supported by the proposed study, take steps to strengthen the management
information system (MIS) and the corporate governance of both village/urban funds
and cooperatives. In the first instance, this should include:
a. Training at national level of staff in corporate governance.
b. Training of trainers who can then go to the field to train the staff of cooperatives
and village/urban funds on how, and why, to strengthen corporate governance.
c. Conduct a SWOT 77 analysis, amongst both cooperatives and village/urban
funds, of their MIS, general management and oversight systems, capacity of not
only the national level but the individual organizations.
d. Fund the lion’s share of the costs of implementing the major recommendation of
these studies.
e. Once the above has been implemented, provide preferential levels of financing
or other support to those cooperatives and village/urban funds who comply with
the new standards established.
76 Note that the needs budget does not include funding for this purpose, as further discussion will be needed to determine
the preferred approach.
77 SWOT analysis identified strengths, weaknesses, opportunities and threat.
THAI FLOOD 2011 RAPID ASSESSMENT FOR RESILIENT RECOVERY AND RECONSTRUCTION PLANNING
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