Spurned by major banks, many of Japan's small- and medium-sized enterprises (SMEs) have to depend on credit unions for financing. Perhaps unique to this country, it is common to see employees of credit unions going around on their bicycles, visiting clients to accept their deposits.
In the process, these officers become very familiar with their clients' businesses and develop a good feel for whether they are doing well or otherwise. But the merger of credit unions in recent years has dealt another blow to SMEs.
One printing company borrowed 70 million yen (SGD1 million) from a credit union in 1994. But when that credit union merged with another, the printer's debt was sold to the Resolution and Collection Corporation (RCC) and his deposits frozen, presumably to offset the loan. Last October, the RCC finally asked the printer to sell his house to repay his debts.
