social credit in belgium caroline evrard credal nice – septembre 2008
TRANSCRIPT
Social Credit in Belgium
Caroline EVRARD
CREDALNice – Septembre 2008
Context and history
• Banking Context in Belgium: – 2003 law on universal banking service,– positif and negatif register within national
banque of Belgium – 1991 law on consumer credit – Preventive measure of the over-indebtedness:
service of mediation of debts + legal device for collective payment of debts
Origin and objectives
• Initial status: – people with low incomes are excluded from
traditional consumption banking credit or are offered a inadequate credit.
• Objectives : – to give access to an adapted credit to enable
them to maintain or improve their daily well-being
– prevention against over-indebtedness: the establishment of a specific credit pedagogy = avoid to give « the credit too much»
Partners
• Public authorities– Social credit = a prevention tool against over-
indebtedness – Public guarantee– Subsidy to cover operations cost
• Crédal: social credit co-operative has been active for 25 years in the sector of the social economy– 2000: professional microcredit– 2003: Social credit
• Bank of the Post was the lender in the early srages of the activity (between 2003 and 2007)
Methodology
• Loan application=opportunity for people in financial difficulties to openly speak about their situation and find personal advice that can avoid the "credit too much."
• Credal is a lender whose primary objective is not to make credit at any cost but to find the most suitable solution for the customer. The government support allows us to have a priority objective of prevention rather than profitability.
• Social Credit = personal advice, low interest rates, non-commercial purpose, loan amount adapted to the budgetary situation of the person
• Public target: – People excluded from traditional bank loans (low
income, benefit recipients, negatively registered, age, health,…)
• Objects: « financing of objects that allow a project life or improve the daily welfare :– Mobility:used car, scooter, driving licence …– House:guaranteed rent , household appliances,
renovation work in the house,…– Health care costs, notary fees, family reunification for
migrants, …– in some cases, the consolidation of debts and credits
– inovation in 2008 : « social green loan»
• Features of social credit – Interest rates: 5% – Size of the loan : from 400€ to 7500€ – Maximal repayment period :3 years
• Productivity• 4500 phone contacts• 1300 people met during an personal interview• 550 social credits granted in 4 years • Total amount that has been granted so far:
1.500.000€• Average loan size : 3000€
Default procedure and default rate:
• Unpaid loans: 8%
• Loss of rate : 1,5%
• Personalized followed-up procedure
ConclusionsAcces banking after the device: • access to customized banking services• individuals who are better informed and better « equipped »• People with low incomes are not bad debtors
Integrated model in Belgium • Unique structure (CREDAL) that fills the role of lender and support /
consultancy
Evaluation• Importance of quantitative and qualitative assessment (to develop
indicators)
Financing• The cost of instruction is expensive• Need multiple sources of funding to insure sustainability the activity