How would you like the concept of banks evaluating you on the basis of your karma and character rather than your financial metrics? Sounds unreal and even illogical, doesn’t it?
But that is precisely how a monk on Thailand is lending money to small farmers and households. He looks at how well they follow the Buddhist precepts like telling the truth or avoiding intoxicating substances. The logic is that it is more important to look at good deeds and not financial records and collaterials. Phra Subin, the monk who started this hugely successful micro lending business says that an individual’s actions inevitably affect them later in life – this, Phra says is at the root of all lending, which keeps borrower’s from defaulting. And to the surprise of all big banks, following this logic has ensured that there no current defaults. Phra gives interest free or very low interest charged loans in return for good karma.
Phra Subin’s Buddhist-flavored lending program, called Sajja Sasom Sab is hugely successful – has some $60 million in deposits and has 66,000 members. This micro lending works on a very simple model – each member contributes, every month, around 30 cents to $15. The borrower gets together with three or five guarantors, all of who are members. He is then allowed to get the money he needs, much more than what he puts in. Members have an incentive to be guarantors so that others will be guarantors for them when they wish to borrow money. The more a borrower repays, the lower the interest rate will be the next month, unlike at commercial banks, which calculate interest rates at set levels. 50% of the money earned by the venture is distributed amongst the members at the end of the year and balance 50% goes to the village welfare fund.
Wish we had more such people like Phra who at the core of their heart, remain true to their religious teachings while practicing these very same lessons in day-to-day life.