This is a new form of banking and loans system in our country. It's done by all types of people, this includes working class guys, stay-at-homes and even the jobless. People contribute a fixed amount of cash per week or per month. They can lend the money to one person who will pay at an interest. They can also start a business and share the profit. It has helped the jobless to get loans since they can't get loans from banks. There are more advantages of this system. Is there such a system in your country?
There is a similar system in our country and we call it a cooperative. The members contribute a fixed amount each month and from that amount, they lend out to their members at a certain interest. They can also buy goods and sell it to the community/company/members. At the end of the year, the members divide the earnings of the cooperative. They only give out loans to members and only up to a certain amount. In most cases, these are informal type of transactions. Some companies accommodate this arrangement by auto-deducting the contributions/loans and remitting the same to the accredited cooperative.
I have adopted this kind of banking system to my 16 teachers. Everyone has contributed a sum of money every pay day, then we draw lot to whoever would the first to avail of the loan. We are doing it every three months and at the end of the year, we make an inventory of the money collected and the money received as the interest. We return their capital investment and divide the income or interest equally among us.
We have that system here that we call PALUWAGAN. It works like a cooperative where members contribute an equity every payday, i.e. twice a month. The money is lent to members although non-members can also borrow money but with a higher interest and also requires a guarantor. At the end of the year, the equity of the members are returned together with the earned interest. The Paluwagan system is common in big offices.
We have a similar system that we call a chit. There is a famous and well established institution for this too where the bih fishes invest. There is also smaller circles of people who rotate money on similar basis and it helps those in need. There is a similar concept among gold and silver jeweller sellera too. People find this very advantageous especially if they are planning their children's weddings.
