In Thailand, farmers' debt from "informal credit sector" was a serious social problem in rural regions in the first half of the 20th century. Thai government established rural credit cooperatives in 1916 to solve the problem. However, the government soon faced the problem of financial difficulties due to high default rate. In 1966, the government created the Bank for Agriculture and Agricultural Cooperatives as a new financial institution to provide loans directly to farmers as well as to agricultural cooperatives. It increased farmers' access to rural credit and the share of loans from "formal credit sector" increased from less than 5% to 70% during the last three decades.
The informal lenders, however, are still very much active in the business. According to Nii Sin Kasetrakon (Survey on Farmers' Debt) published by the Ministry of Agriculture and Agricultural Cooperatives, during 1980's "informal credit sector" is still important source of finance for farmers, especially for the poorer farmers, to meet urgent needs.
Thus, we may say that both formal and informal credit sectors play respective important roles in meeting the farmers' debt of today's rural Thailand.