B. Designing adequate microfinance products and services
Conditions for Loan Repayment
How to make them realistic and responsive to client needs and sensitive to the agricultural cycle of the activity financed? (e.g. repaying in instalments that correspond to their production cycle).
Both Prizma in Bosnia and Herzegovina and Demos, in Croatia, have introduced new conditions for loan repayment that take into consideration the specific context of the rural poor. The former now accepts a higher, though still manageable, rate of delinquency on quick-access loans (30 days delay rather than one), when their low-income clients encounter cash-flow difficulties due to late salary, pensions or remittance payments, or to family crises.
Demos in Croatia has introduced grace periods on certain clients' repayment of the principal amount borrowed. This modification is particularly designed to make their loans more attractive to start-up microentrepreneurs, many of whom need time to generate enough income with which they can start loan repayment.
 |
back to Designing adequate microfinance products and services |