Banking on karma: How an abbot’s loans are aiding Thailand’s rural poor

By Kyle Lawrence Mullin May 14, 2015

Karma dictates that you get what you give. But Phra Subin Paneeto may be the first to apply that selfless Buddhist principal to the cut-throat world of commerce.

The socially conscious Thai abbot was the subject of a recent Wall Street Journal profile, which detailed how his low interest micro loans are helping impoverished villagers in the Baan Na Kluea region break free of burdensome debt. Phra Subin’s lending service, dubbed Sajja Sasom Sab, started in the early ’90s with only a few thousand baht, but has since grown into a massive, full-on philanthropic enterprise, gathering US$60 million in loans and deposits.

It works like this: 66,000 members each make monthly offerings 10-500 baht (US$0.30-$15) to Sajja Sasom Sab. Any member looking to borrow is grouped with three to five guarantors, who are also members and typically friends or family of the borrower. The borrower can then withdraw more than they contribute at an interest rate of one to two percent a month, or sometimes zero interest, depending on their adherence to Buddhist virtues like honesty and sobriety.

Phra Subin was quoted as saying: “Other financial institutions, they look at your financial records, assets and collateral. But (for us), the community will evaluate your good deeds… If you are not honest or sincere to other group members, nobody will help you when you want to borrow the money. This community will force you to practice Dharma, work hard, be honest and take responsibility. Otherwise no one will want you.”

Aside from the philosophical benefits, villagers say the system is also practically beneficial because, unlike most banks, Sajja Sasom Sab’s interest rates aren’t fixed but instead decrease the quicker borrowers settle their debts.

The article described one such borrower, Panisa Satharalai, whose father withdrew 1 million baht (US$29,297) from Sajja Sasom Sab to rebuild his family’s home. In the interim, Panisa has doubled her income by running small businesses, like homestays and catering operations, at the revamped home. She was quoted as saying: “This is a happy debt. This loan gave me a job and makes me want to get up early every morning to work hard, and it shows how united our community is. I won’t need to worry that I could not pay it back and risk losing my house and land.”

Critics point out that much of the success that such generous micro lending operations attain hinges on the charisma and hard work of the leaders Phra Subin Paneeto’s scheme, with Asian Development Bank economist Luxmon Attapich questioning: “What if they are not around anymore?” However such creative, grass roots solutions are deemed by many to be acceptable, because so much of Thailand’s low income population is trapped in debt. A 2013Economist article detailed how prevalent loan sharks are in Thailand, and how violent they can be with borrowers who are slow to repay debts set at crippling interest rates. A more recent Asian Correspondent article, meanwhile, noted that Thailand’s debt-GDP ratio is 85 percent, compared to the 2010 ratio of 60 percent, making Thailand the most debt inundated country in Southeast Asia.

And while fairer loans may be a crucial asset in Thailand’s fight against poverty, Orapan “Kate” Pratomlek, insists that it’s not enough on its own. The spokesperson for the Goodwill Group Foundation in Bangkok, said in the aforementioned article that: “The Thai government should raise wages and provide better jobs including social welfare instead of providing interest free loans.”