Moo Ban Banks

[Bkkorupcountry]

Does anyone have more specific information on what these are and how they operate? The reason I'm asking is because apparently, other than depositing money there, there is also the possibility to give them a loan if and when they are short of cash to lend. How safe / risky is this?

To the mods:

I know that gambling / illegal money lending etc is not allowed on the forum but I don't think this is illegal. One actually opens an account with the bank, gets a passbook etc etc so I'm pretty sure that they are legal.

[David006]

Are you talking about the village money lending "clubs" as "Moo Ban Banks" is that what they call 'em??

My SIL ( the original "cheap charlie"..lol) runs one and, although the interest rates are high, I think they are of great assistance to many people where normally loans would be impossible....

We contribute heavily to SIL's "business"..realizing anywhere between 20-30% pa ..though I have tried to work out how it all works it is beyond me...there seems to be a rather complex ( to me) assignment of interest to "investors"..

.Not heard of any "defaulters" as, no doubt, this would ostracize the defaulting borrowers and they would loose face(village environment)preventing access to future loans. ( remember also, loan amounts are small, anywhere between 200-5000 baht spread over 100s of borrowers so the "risk" is small)

This sort of thing has gone on, and probably still does, all over the world where there is a local "money lender" among the less affluent "hand to mouth" populous(remember the one in "Angela's Ashes?")

When one stops to work out the amount of service fees etc regular banks legally "fleece" their customers, it puts things in perspective....lol ( credit card interest for example, which is effectively short term borrowing is what? around 18%?)

Not to mention the pittance of interest they are allowed to pay!

[bifftastic]

I think they work like a Credit Union. We've just paid back the 20K the local concern (the wife calls it 'small bank') lent us for our wedding. She could have borrowed it again a couple of days later if she needed to.

She deposits money every month and see's it as some kind of saving scheme, should she need to she can borrow again, and the money she deposits helps other people when they need it.

[Bkkorupcountry]

From what I understand, you start an account (with any sum of money but no less than Bht1,000 I think) and then decide on a monthly amount to deposit for a period of 12 months. At the end of this 12 months, you can withdraw with interest (so almost like a rolling fixed deposit). You can also keep continuing the deposits if you do not wish to withdraw the money. So I guess it is some kind of savings scheme and at the same time, keeping the "village" liquid for those in need of short term funds.

I recently lent Bht 400,000 for a week and I got Bht 4,000 in interest IN ADVANCE (from the bank, not the borrower/s). That works out to what, 52% per annum? Extremely high rate but some others were asking for double that (to lend to the bank). I wasn't at all interested in the Bht 4,000 but as the MIL is the deputy PYB, she explained this was needed by the bank to continue some short term loans while waiting for further deposits from the other customers / investors (I think creditors here might be the better term) so in a sense, I was doing a "favour" to the community.