Since the pilot MicroCredit Business Scheme (MCBS) was launched by POSB, the Social Enterprise Hub and Tote Board in November to help low-income Singaporeans stand on their own feet by starting or expanding their mini-businesses, there had been some quality submissions by applicants with genuine needs - as well as "frivolous" ones. While it's too early yet to judge the pilot scheme's impact, SMU Professor of Finance Benedict Koh ventured that the interest rates - from 8 to 12 per cent a year ? could be too high to fulfil its social objective effectively. He felt that a breakeven rate ? which typically covers administration costs and allowance for potential bad debts - of about 5 to 6 per cent is more realistic. Prof Koh also suggested that bad debts be written off for "genuine failure" cases.
TODAY