Micro Financing - workable model in singapore?

I have been following the model of micro-financing or micro-loans as it is also known, for some time now. It first came to my notice through nobel prize winning Prof. Muhammad Yunus & Grameeen Bank. Then came Kiva.org which I recently became a member and pledged to do so on a monthly basis. Then I came across another for profit peer to peer site at prosper.com which really set me thinking. Can we have a similar model in Singapore?

While here I was, committing myself to a minimum of  USD $25 monthly in helping someone I have never seen halfway across the globe, I began thinking if I should actually do more for my fellow citizens, my fellow neighbors. I currently contribute only a measly $2 per month to the Community Chest, while I used to contribute $10 or $15 monthly to NKF through their lifedrops programs, I stopped doing that since the NKF saga came to light. On and off, I make contributions whenever I see those fundraisers on the street or fundraiser shows on TV, but its nothing regular, an nothing exceeding $10 each time, after being wary after the NKF saga of how my money may actually be lining the pocket of some fat cats instead of reaching those that really need it.

I am quite captivated by Kiva's model, in the sense that it is peer to peer. Just a quick summary (please do check out the website for more details), what Kiva does is that it basically connect lenders willing to lend a min of USD $25 to poor entrepreneur borrowers to help them set up a small business in order to get out of poverty. As a lender, you browse the listing with photos and short description of the would-be borrowers and decide who you want to extend the loan to. In a way, you know that your money is going towards an individual or group of your choosing. It puts a face to your recipient and personally, it gives a warm fuzzy feeling to know that you have made a difference to that person and his family. Unlike giving to a charity, the borrowers will pay you back and upon receiving back your loan amount, you can choose to recycle the loan amount once again or donate the money to Kiva to aid their operating costs. Of course, there is always a risk of default, but personally, I am looking at this from a charity point of view, I am fully prepared not to get back my money, and if I do, I will be recycling them again to someone else in need.

The other site that I mentioned earlier, prosper.com, is similar to Kiva in a way in that it involves peer to peer lending, however, it does not limit itself to poor entrepreneurs, its really for anyone. The other difference is that the lenders gets to charge an interest compared to Kiva where the lenders does not earn any interest. Browsing through the site, most people are using it to reduce their credit card debts really, where instead of paying the bank on average 24% p.a on credit card interest rates, the borrowers get a peer to peer loan at interest rate for example 6%. The borrower saves on his interest rates, the lender earns a much much better rate than savings account interest rate.

I see this second model working here in Singapore. To be honest, I am sick and tired of seeing those personal loans and credit lines commercial that the banks are offering. In many adverts, they are encouraging people to use the loans for holidays, pay for some luxury products etc which I feel is somewhat irresponsible. Of course, a bank is still a business, and with personal loans and credit lines being big money makers for them, I can see why they are keen to expand that area of the business, but I wish they can do so in a slightly more social responsible way. Then again, they have no incentive to do so at all and its up to individual borrower to read and understand the terms and conditions.

If we can somehow implement the peer to peer lending model, we can actually help those people that get into debt unwittingly and help them out of the debt. Or to lend to people with genuine needs that couldn't qualify for a government aid. If the government can't or wouldn't help us, shouldn't we help each other?

Its an idea of course, implementation is another whole different matter.