DUBLIN, Ireland–The Department of Social Protection here is reporting that 27 credit unions have expressed interest in piloting micro-loans for low-income families. The test is projected to launch in the Autumn. If successful, is to go nationwide across Ireland in 2016.
The Independent reported that as part of the pilot scheme, each credit union will administer up to 30 loans that will be aimed initially at those on social welfare.Interest rates of up to 12% will be applied on the loans, compared to rates of up to 188% charged by private firms.
“It is envisaged that repayments would be virtually guaranteed because people would be required to have the money taken from their social welfare under the Household Budget Scheme,” the Independent reported. “There will be an involvement by the Money And Budgeting Advice Service (Mabs) to ensure people don’t seek loans they cannot afford.
The Personal Micro Credit Scheme is being led by Kevin Humphreys, Minister for State at the Department of Social Protection, in conjunction with the Department of Finance and other interest groups.
“This is all about helping people who are currently left with no option but to go to moneylenders and pay exorbitant interest rates,” the Humphreys said.
The Independent reported that it’s also feared that the number of people using money lenders could rise to as high as 400,000, which has caused concern within Coalition circles.