Credit Union

The launch of the Khlong Toei Cooperative for Community Service (or credit union) as a slum dwellers bank in 1994 was an important new initiative for the Khlong Toei community and the DPF. The Duang Prateep Foundation started the credit union to give empowerment to the urban poor with whom the Foundation works.

Twenty one slum communities joined together with the Duang Prateep Foundation to start the cooperative in January 1994 at a large meeting which was also attended by the national finance minister.

The Food and Agriculture Organization's Microbanker Project gave considerable assistance. The cooperative was the first organization to use Thai language software devised by Microbanker for use by community banks and the cooperative staff were trained by the FAO. Membership is presently over 1,100, with over 14 million baht held by the bank. All new members must attend a training session to learn about the cooperative regulations and to be told about the importance of saving. Each month members must make a deposit of at least one hundred Baht.

The credit union represented a significant step forward for the slum community as it has given members greater freedom to manage their own affairs. Poor slum dwellers cannot obtain loans from commercial banks. Poor people also sometimes have small temporary shortages of money. Ill health or injury to the wage earner can quickly drive poor families into deep poverty. The expenses connected with the start of the new school year each May, also force many poor people to borrow money.

Traditionally poor people have had no alternative but to borrow money from "loan sharks" at times of hardship. Such lenders impose penal rates of interest of up to 3% each day and they are often unscrupulous in their methods of dealing with late repayments. Poor people who borrow from loan sharks are often trapped in an ongoing cycle of debt as they struggle to repay their loans.

The Khlong Toei Cooperative for Community Service lends money for various purposes. People can borrow up to 3,000 Baht to cover emergencies, while to provide start up capital for a business or for home improvements up to 100,000 Baht can be lent. Borrowers from the credit union are not confronted with the penal rates of interest they know from the loan sharks.

The slum dwellers cooperative aids the further development of the Khlong Toei community. The cooperative encourages a climate of saving, members become accustomed to making monthly contributions. The credit union can help slum dwellers improve their prospects in life. Most importantly the Khlong Toei Cooperative for Community Service brings the community together to tackle their problems and plan for the future.