Phra Subin Paneeto

Phra Subin Paneeto, a Buddhist monk  in Thailand, has been heading his own highly successful micro lending organization since the early 1990s.

It is not unusual to consider Buddhist monks in the same thought as “karma” and “Dharma.”  But throw “micro lending organization” in there as well and you’ve got something novel.  Novel, at least, to the western world.

Phra Subin noticed that the local villagers were having trouble making ends meet, so he began lending small amounts of money for home repairs, equipment purchases, and to pay off larger, costly debts.

Today, more than 20 years later, Phra Subin’s organization, known as Sujja Sasom Sab, has accumulated about $60 million in deposits and loans.  Borrowers typically pay between 1% and 2% in interest, although several do not pay any interest at all.

Part of the brilliance of the plan is that borrowers are grouped with three to five guarantors. The motivation to serve as a guarantor is that at some point you will likely need guarantors yourself.

But the true genius of this plan is the application of Buddhist principles to interest rate levels.  If you tell the truth or avoid alcoholic beverages, for example, your interest rate could be reduced to zero.

While this certainly cuts into the bottom line, the focus on Dharma (Buddhist teachings) also reduces loan defaults to near zero levels.

Phra Subin refers to this as “karmic peer-pressure.”  If you don’t work hard, tell the truth and take responsibility for yourself, nobody else will want to work with you.  This has created a system of karma that polices itself and inspires hard work at home and in the community.

Other unique characteristics of Phra’s program is that the more a borrower repays, the lower their interest rate will be in the next month.  That’s quite different than the locked-in, fixed-rate, or even adjustable (upwards mostly) interest rates of most lending institutions in the world.

Other religious groups have tried similar plans, but none to the extent of Sujja Sasom Sab.  The Catholic charity Caritas Manila has loaned money at low rates in the Philippines, and Hindu charities in India have done the same.

Critics say that while such programs are highly successful at first, they falter when their leader or elders move on or die off.  But thus far, Phra Subin’s karma-based lending plan is a blueprint for all to follow.

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