How would anyone outside the business know what the true default rate is?Abou-Gor wrote:MFIs seek regulator’s support
http://www.phnompenhpost.com/business/m ... rs-support
return on equity of about 20 to 25% grabbed from poor fuckers. well i guessed they deserved it.The apex body for the nation’s microfinance industry announced yesterday that the central bank had tentatively agreed to a number of measures it had requested to ease the burden on microfinance lenders following last week’s unilateral decision to cap annual interest rates at 18 percent as of April 1...
Ieng Tong said if the central bank were to follow through on these measures he was optimistic that the microfinance sector could weather the sudden imposition of an 18-percent cap on interest – a drastic cut from the prevailing 20 to 30 percent rates offered on loans under $1,000. Analysts have warned the new interest rate ceiling could bankrupt dozens of MFIs while drying up credit channels to the poor...
“The problem is that some of his colleagues in the government think that all MFIs are hugely profitable and can handle this 18 percent cap, which some can, but they don’t fully understand the market and that the smaller players giving small loans are barely profitable,” Mony added.
Sok Voeun, chief executive of LOLC (Cambodia) Plc, said the rate cap would slice deep into the MFI’s profits, but was unlikely to sink it.
“Our return on equity will decrease significantly this year and next year,” he said. “In the past, we use to get a return on equity of about 20 to 25 percent, but this year we might receive maybe 5 to 10 percent.”
for being poor i mean. im sure you would all agree (in private)
this dumbass posted the comment below yesterday.so in your above posts, you've repeated the info about how the figures are manipulated to show low default - something that was posted pages ago. but no one has made a comment as to what the real rate of default is.by Abou-Gor » Sun Mar 26, 2017 7:44 am
the major problem in all this seems to be the small loans for food and medicine which are being capped in the same package without the government making a distinction.
As a reason for manipulating the figures one of you suggests it is to avoid 'negative publicity'. if that doesn't set alarm bells ringings then i don't know what does.
And unless there is consistency of definition of default the isolated stat is meaningless.
Anyhow you are too fixated on default rate.
The important consideration is 'cost of running an account', for example cost of collection for accounts running as per contract is more expensive than in countries in which people use bank accounts for their salaries.
I'm sure you can comprehend that manual collection agents are much more expensive than automated standing orders.
The cost of collection for a client in arrears is more expensive still, & the the cost of collection for a customer in default (including sale of debt/write off) is even more expensive.
So, default rate is significant but it isn't as important as you seem to think.
Microfinance borrowers are high risk but also very expensive to administer.