Tontine: peer-to-peer lending/borrowing/saving (Singapore)

Tontine: peer-to-peer lending/borrowing/saving (Singapore)

In Radio 4’s seven-day serialisation of (the abridged version) of Karachi Vice, I hear “savings group” mentioned.

This reminds me of a similar community-based arrangement set up on my grandma’s coconut plantation in Singapore.  It’s called a huì (會 / 会 huì / a gathering).

Wikipedia says: QUOTE A rotating savings and credit association (ROSCA) is a group of individuals who agree to meet for a defined period in order to save and borrow together, a form of combined peer-to-peer banking and peer-to-peer lending. UNQUOTE

(https://en.wikipedia.org/wiki/Rotating_savings_and_credit_association)

My understanding of why they’d done it this way is that they were mainly, if not all, illiterate people who didn’t want to deal with official bodies like banks, as they wouldn’t be able to fill in forms, for example.  (That’s also the reason people in 1950s and 1960s Singapore got a private midwife like my mother: they were illiterate people living on coconut and rubber plantations who didn’t want to have their babies in the hospital for their lack of English to deal with the bureaucracy.)

As it was illegal, it was always very hush-hush.  My mother would whisper, “I’m off to grandma’s for a meeting of the ‘gathering’.”

At these meetings, people who needed to borrow money (for a son’s wedding, say — Chinese wedding banquets would have at least ten tables [of ten people each] to give the family enough “face”) would bid for the sum with a high interest rate of repayment.  That’s how the rest of the group earned some income from their spare cash.

The term I knew for it in the 1960s was “tontine”, which nobody in my British circles had heard of.

(Singapore, 1960s)

Wikipedia says: QUOTE A tontine (/ˈtɒntaɪn, -iːn, ˌtɒnˈtiːn/) is an investment plan for raising capital, devised in the 17th century and relatively widespread in the 18th and 19th centuries. It enables subscribers to share the risk of living a long life by combining features of a group annuity with a kind of mortality lottery. UNQUOTE

https://www.kitces.com/blog/tontine-agreement-instead-of-annuity-lifetime-income-mortality-credits-and-book-review-of-milevsky-king-williams-tontine/

QUOTE A tontine agreement is a form of pooled investment fund to which the investors contribute a lump sum and in exchange receive ongoing payments (or “dividends”) as a return on their investment. Similar to a single premium immediate annuity, the payments from a tontine are typically made “for life” and end only at death. UNQUOTE