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Is over-indebtedness a problem among microfinance borrowers?

April 26, 2017borrowers microfinance over-indebtedness problem

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Is over-indebtedness a problem among microfinance borrowers?

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We are very concerned when borrowers cannot comfortably repay their loans and we try our best to protect the interests of our borrowers and ensure that defaults do not occur. But although there are incidences of default, these cases are a small percentage of the overall loan portfolio at both SKS and in the industry. SKS served 5.3 million clients as of September 2009 and has maintained repayment rate of more than 99%. Microfinance institutions in India served 22 million clients in 2009 and have consistent repayments rates of 95% and above—repayments that clients could not make if they were not generating regular income, given the weekly repayment schedule that most microfinance institutions follow. The Microfinance Information Exchange (MIX), the Washington-based non-profit information platform, reports that the average repayment rate of leading MFIs in India which have the lion’s share of clients— is 98%.