What is the repayment rate?
The repayment rate in the microfinance industry has been higher than 92% and sometimes as high as 97 or even 100 % even though there is no collateral. There are several reasons for this. Borrowers of microcredit are always women and loans are usually given to women in groups of 10 or 15. This creates a social collateral and if there is a default from one borrower, the peers in the group pitch in. There is also peer pressure that is created within the group so that defaulters are always under pressure by peers to repay.
