What is the ability of rural and agricultural finance clients to repay loans?
• Crop harvest or sale of animals • Sale of processed product to buyer/exporter • Microenterprise income • Household members’ salaries and other earned income • Remittances or domestic money transfers • Sale of assets Formal collateral (as opposed to collateral substitutes such as group guarantees) offered by RAF clients takes varied forms, including: • Land • Crop harvest • Animals • Farming equipment • House • Household appliance or personal assets There are many potential problems in using these types of collateral. In some countries, land may not constitute an effective guarantee, either due to lack of land titling or judicial or political reluctance to enforce legal contracts (e.g., claiming land in compensation of non-payment on a loan) that would drive poor farmers away from their means of livelihood. Banks cannot use a house as collateral if the house cannot be seized (primary residence laws). In some countries the lack of lien laws or movable property registries may prevent th
