MICROCAPITAL BRIEF: Singapore Totalisator Board, POSBank, Social Enterprise Hub Launch $4m MicroCredit Business Scheme (MCBS)

With seed capital of SGD 5 million (USD 3.96 million) from the Singapore Totalisator Board, a quasi-governmental gaming commission also known as the Tote Board, POSBank (POSB), a commercial bank in Singapore, and Social Enterprise Hub, an incubator of social enterprises in Singapore, have launched the MicroCredit Business Scheme (MCBS) to provide loans to citizens of Singapore with annual incomes lower than SGD 30,000 (USD 23,800). POSB will provide microloan administration, structuring, disbursement and repayment collection for the unsecured small business loans, which will range in size from SGD 5,000 (USD 3,963) to SGD 50,000 (USD 39,630) [1]. Unspecified social welfare organizations have volunteered to market the project.

A business plan is required to be eligible for the loans. “This scheme is not a grant, it is not an entitlement. We are not a private equity fund. We are not an angel fund, neither are we a venture capitalist. This is a commercial loan and it is expected to be repaid,” said Mr Kuo How Nam, the program office head MCBS [1]. To date 12 businesses have been financed [2].

By Courtney Snelling, Research Associate

About Singapore Totalisator Board: The government of Singapore established the Singapore Totalisator Board (Tote Board) in 1988. The Tote Board is legally authorized to operate horse racing and gaming operations in Singapore. Tote Board funds various projects including the microcredit business scheme from the gaming surpluses from the operations of Singapore Turf Club, Singapore Pools and casino tax revenue.

About POSBank: The government of Singapore established the Development Bank of Singapore Limited (DBS) in 1968. Since 1968, DBS has transformed into a private financial services institution with 200 branches in 15 markets. DBS is headquartered in Singapore and has four million customers. DBS also operates POSBank, a mass market franchise that currently has 3.2 million customers. As of 2012, POSBank is implementing a microcredit business scheme funded with the equivalent of USD 4 million. As of December 2011, DBS Bank Limited had total assets of USD 340 billion, a gross loan portfolio of USD 195 billion, return on equity (ROE) of 10.2 percent [2]. The government of Singapore owns an unspecified percentage of DBS Bank Group Limited stock through its investment vehicle Temesek Holdings.

About Social Enterprise Hub: Established in Singapore in 2011, Social Enterprise Hub Limited (SE Hub) is a private social enterprise that invests in and incubates other social enterprises. Unlike a venture capital firm, SE Hub does not seek profit maximization. Instead SE Hub balances financial returns with social benefits. SE Hub incubates businesses until they are able to operate independently, at which point SE Hub divests from the new firms. The company and its incubator are located on the campus of Singapore Polytechnic, which was founded in 1954 to train students for work in technology and to support economic development in Singapore. Neither financial data on SE Hub nor the number of companies it has spun off are available.

Sources and Additional Resources:

[1] Justmeans.com, “Microfinance Project Helping Low Income Group in Singapore”, http://www.justmeans.com/Microfinance-Project-Helping-Low-Income-Group-in-Singapore/51979.html

[2] MCBS.com.sg, “MCBS”, http://www.mcbs.com.sg.

[3] DBS.com, “DBS Bank Group Limited and its Subsidiaries Annual Report 2011”, http://www.dbs.com/investor/2011/DBS_Group_2011_accounts.pdf

MicroCapital.org Story, March 9, 2010, “MICROCAPITAL BRIEF: Janalakshmi Financial Services (JFS), a Microfinance Institution (MFI) Located in India, Raises $10m from Funders Including Tree Line Asia Master Fund (Singapore) Private Limited and Bellwether Microfinance Fund”, https://www.microcapital.org/microcapital-brief-janalakshmi-financial-ser

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