Karmic borrowing: Micro-lending based on good deeds

Well, if you have the potential for good karma, you may consider signing up to Buddhist monk Phra Subin Paneeto's micro-lending scheme, which is spreading across Asia, as Hoang Nguyen finds out.

Meanwhile, Carolina Valladares and Mohamad Chreyteh head to Jordan to find out how aspiring businesswomen are bypassing the banks.

No collateral? No problem....

For the past 24 years, Buddhist monk Phra Subin Paneeto has been the go-to guy for Thai people who need a loan but can't go to a bank as they have no assets a financial institution would be prepared to lend against.

Phra Subin Paneeto, however, has faith in something he believes is far more powerful: the rule of karma.

In the 1980s, the monk witnessed first-hand the poverty and social problems affecting Thailand's remote towns and provinces after he embarked on a country-wide pilgrimage.

But it was not until 1992 that he could gather enough support to start a micro-lending operation to help local villagers in the southern province of Trad to deal with their money-related difficulties.

The scheme, which combines Buddhist teachings with a community-based management method, has resulted in a micro-banking network, which today holds $63m (£43m) of deposits and loans.

Borrowers take out loans for necessities such as food, clothing, medicine and home repairs. Some also seek larger sums for building houses and purchasing land for cultivation.

The scheme, known as Sajja Sasom Sab, is run as a co-operative, accepting only people who live locally. Members contribute a small amount monthly.

The reason they choose to take out loans from this scheme instead of going to banks is because banks require collateral and credit history.

Rule of karma

However, borrowers, who are also depositors, pay low or even no interest when they take out the loans. There are conditions though. They have to find at least three guarantors to whom they are not related.

"I'd say to them the money in the community must not be lost; so people need to solve the problem together with the community, by the community and for the community. They can't take out the loan and not pay it back," Phra Subin Paneeto warns. "So anyone who is not honest, there won't be anyone willing to be his guarantor."

He believes that this screening mechanism not only ensures that all members have their say in how the scheme should work but also helps the community to come up with its own solutions to the problems members face.

"This is called the rule of karma, the joint action in the community," he says.

His micro-lending network has spread across 40 provinces in Thailand, with similar schemes introduced in neighbouring Laos and Myanmar.

He says there have been problems in remote parts of Thailand due to ageing populations and a shortage of young, educated workers. Also, much of the countryside's population relies on the agriculture sector, which does not necessarily provide social security.

Therefore any profits the scheme produces are used to take care of the elderly or the sick in the villages instead of being shared out as dividends.

"I always say: do not focus on the profit but on the welfare of the people and the community instead," Phra Subin Paneeto explains.

(BBC)