Does MFIs charge high rate of interest for the loans?
Like other financial institutions, microfinance institutions (MFIs) charge interest for the loans they make to their clients. The interest covers the high cost of making very small loans and personally servicing each client every week. It also covers the cost of managing the encashment zone or cash centers; the peer support group process; and providing information on social services, personal development, and other critical information that helps clients improve their lives and the future of their families. With respect to First Premier Microfinance Bank, our rates are also largely influenced by the rates MFIs like us pay for borrowing the funds that we in turn lend to our micro entrepreneurs. First Premier Microfinance Bank interest rates can range from 15 to 20 percent, depending on the conditions in each transaction and the risk factors inherent.
