Indian MFIs Shift to Monthly Repayments
Mohan, K.

Some Indian MFIs are adopting a monthly model of loan collection, matching the cash flows of their customers. This departs from the established Bangladesh model of weekly collection, which relies on connecting with customers frequently. In the process, the loan size for consumers is on the rise, with a reduction of interest by six or seven percent as compared to weekly repayments.

MFIs also get to keep the client base intact for a longer time, reducing the scope for poaching by competitors. The companies also reduce overhead costs, which are an average of 3.7% of the total outstanding, as the field staff makes only one visit in a month for collection as against four in the weekly model.

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