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Debt repayment rates on microfinance loans in much of the developing world remain high, but industry players are stressing a need for vigilance given the growing practice of multiple borrowings.
The combined industry repayment rate in the Philippines, for example, was 90% in 2010. NGOs boasted a rate of 95%, while rural banks reported 85%. The higher repayment rates for NGOs reflect their relationship-based nature.
They have become business advisers to their clients and help them in developing successful services and business plans. NGOs in the Philippines have around 2 million clients, while the rural banks have around 5 million. Over-indebtedness among clients is a looming threat, though, if institutions fail to manage their client’s exposure to multiple borrowing. This practice has already given rise to a repayment crisis in India.
Having high rates of #microfinance loan repayments is great, but be ware of multiple borrowing! http://bit.ly/ikrKNz