[PrincipalSkinner]

I have recently discovered that some rural banks in the Philippines are offering 20% annual interest, and the deposits are insured by the Philippine govt's FDIC. The obvious question is "what can they be doing with my money that they can afford to pay me 20%?"

Here is part of an email just received from a bank rep regarding this question:

" . . .One question you raised or your friends might have asked was about how the 20% interest yeilding is being managed by these rural banks... I mean Im refering the example of rural banks that xxxxxx Company owns. Well... the answer concerns about how the outlet of funds are being brought for business by these rural banks.
1. These banks are into micro lending to government employees especially teachers and military personnel through salary deduction charging 36% per annum.
2. It also lends to financing companies in Hongkong and Macao especially for OFWs charging 54% per annum.
3. It also engages in credit card transactions which has 42% interest per annum.
4. These banks also transacts government rediscounting at 60% per annum.
5. It is also ofering jewelry loans at 48% per annum.
6. And lastly, banks are transacting commercial papers by lending to multi-national companies especially those with trust fund difficiencies on a multi-million peso loans charged with 20% interest per transaction. . ."

I am currently getting someone reliable in the Philippines to do on-the-spot research. If it looks solid, I'll probably do it. If you want to know more send me a pm and I'll keep you posted as I find out more.