Buddhist Monk in Thailand Relies on Karma for Lending Success
Wednesday, May 13, 2015
Buddhist monks aren’t really known for dipping into the material world of finance. Phra Subin Paneeto, though, says he felt he didn’t have much choice when he saw his neighbors near Thailand’s border with Cambodia were struggling to make ends meet.
So, in the early 1990s, he started a microlending operation with a few thousand baht, lending small amounts to villagers to help pay for home repairs, buy new farm machinery and pay off other, larger debts.
Today, Phra Subin’s micro-banking network has amassed about $60 million in deposits and loans.
The idea is that its 66,000 members will each contribute sums ranging from 10 baht to 500 baht, or about 30 cents to $15, a month. Each member who wishes to borrow is bundled together with three to five guarantors, and is allowed to tap more than they put in, at an interest rate of 1% to 2% a month—or less if other villagers agree. Some borrowers pay no interest.
The guarantors, who are all members of the group, are often friends, relatives or neighbors of the borrowers. Members have an incentive to be guarantors so that others will be guarantors for them when they wish to borrow money.
Half of the venture’s earnings are paid to the members at the end of each year. The rest go to a village welfare fund.