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Library » Delinquency Management and Interest Rate Setting for Microfinance Institutions

Delinquency Management and Interest Rate Setting for Microfinance Institutions
2009, CGAP
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Studying critical issues affecting MFIs’ sustainability

This Delinquency Management and Interest Rate Setting course concentrates on two areas that are especially important for MFI managers, namely, controlling delinquency and defaults and determining a sustainable interest rate.

During this course, participants learn to determine causes and costs of delinquency, measure and control arrears, calculate costs of credit for clients, among other skills, through exercises, group activities and case study analysis. The course states that:

Delinquency is caused by MFIs that have not implemented an effective methodology;
MFIs need to discipline borrowers and create an image of being intolerant of late payments;
Loan sizes and terms should not make repayment difficult.

International best practice for microfinance suggests that sustainability is an attainable MFI goal. The course involves participant in a study of the two critical issues affecting the goal of sustainability for MFIs, namely, delinquency management and interest rate setting. Participants learn about:

Different levels of sustainability;
Interest rate concepts;
Setting sustainable interest rates;
Calculating effective interest rates;
Calculating costs of credit from the borrower’s perspective;
Confronting barriers to setting sustainable interest rates.

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07 Jan 2011
Delinquency Management

Delinquency is one of the killers of microfinance institutions. The earlier it is controlled, the better it is for the institutions.

Bismark Nyarko Mec-Ellis Foundation Ghana

02 Feb 2010



India

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Journal Volume/Pages:
327

Publisher(s):
CGAP