International best practice around the world suggests that sustainability is an attainable goal for microfinance institutions (MFIs). However, in reality managing of loan delinquency remains one of the difficult tasks of any micro finance institution. As a result, loan delinquency, which can lead to default, is probably the largest single reason for downfall of institutions involved in the provision of credit. While the more effective option in managing of good loans would be one that mitigate against its occurrence, many MFIs wait to manage loan delinquency which often times is costly and ineffective.
The importance of maintaining healthy loan portfolios and making good loans is often appreciated within an organization. However, the strategic, operational and financial impact of poorly performing loans is often times not fully appreciated, especially by credit staff. In order to keep loan delinquency under control therefore, the risks it presents must be identified at every stage of the loan process and appropriate mitigating measures adopted to effectively manage it. It is also critical that every individual in the MFI be made aware and involved in loan delinquency management.
This course was developed by CGAP and provides participants with techniques and tools to improve financial services and sustainability of their respective institutions through properly managed loan portfolios. The training will also emphasize the importance of setting realistic interest rates and managing funding to achieve institutional sustainability.
The goals of this course are to analyze the cause of delinquency, appreciate the costs of delinquency to the institution and how to control delinquency. In addition the course seeks to:
"SAM provides the crucial knowledge, information and skills that have the potential to improve human livelihood globally."Gabriel Kamuge