You are currently browsing the tag archive for the ‘Boulder Institute of Microfinance’ tag.
> Posted by Jami Hubbard Solli, Senior Policy Advisor, Consumers International UK
We originally published “D” Is for Default a few weeks ago in English. We’re pleased to now share the post in French and Spanish, made possible by the Smart Campaign’s Nadia van de Walle and Laura Galindo, respectively. Read the post in French here, and in Spanish here.
What really happens to microfinance clients who do not repay their obligations?
As a late-comer to microfinance in 2005, I bustled from the Boulder training, to the Blue Book conferences, to the MicroCredit Summits (and back), trying to understand the dynamics of microcredit. At all these events, I heard proclamations of very high repayment rates, which sparked curiosity about what happened to that small percentage of borrowers who couldn’t (or wouldn’t) repay their microloans. This topic wasn’t presented at any conference I attended.
There has been industry research done on why clients default, as well as interesting work highlighting the gap between providers’ and borrowers’ perceptions and experiences related to over-indebtedness.¹ However, there is very little work done that details the actions taken by practitioners when a borrower doesn’t repay, nor on the experience for defaulting clients in the short-term, or over time.
The knowledge gaps on default management include what providers actually do, as well as what influence (if any) legal and regulatory frameworks have on industry practices. For example, what guidelines or boundaries does a country’s legal framework offer on debt collection? Is there a prescribed manner in which MFIs can collect a past due debt, including how to go about the seizure, valuation, and the sale of collaterals? Is there a limit to the length of time which a borrower is legally responsible for a debt? What are MFI practices regarding collection post write-off? Are there any insolvency or personal bankruptcy provisions available to debtors, either by law, or through voluntary debt counseling centers? More importantly, if the legal framework does exist, is it enforced? Are MFIs aware and in compliance with requirements? And, lastly, there does not appear to have been any industry research on the consequences of default from the client perspective.
> Posted by Jami Hubbard Solli, Senior Policy Advisor, Consumers International UK
Spanish Version » French Version »
What really happens to microfinance clients who do not repay their obligations?
As a late-comer to microfinance in 2005, I bustled from the Boulder training, to the Blue Book conferences, to the MicroCredit Summits (and back), trying to understand the dynamics of microcredit. At all these events, I heard proclamations of very high repayment rates, which sparked curiosity about what happened to that small percentage of borrowers who couldn’t (or wouldn’t) repay their microloans. This topic wasn’t presented at any conference I attended.
There has been industry research done on why clients default, as well as interesting work highlighting the gap between providers’ and borrowers’ perceptions and experiences related to over-indebtedness.¹ However, there is very little work done that details the actions taken by practitioners when a borrower doesn’t repay, nor on the experience for defaulting clients in the short-term, or over time.
The knowledge gaps on default management include what providers actually do, as well as what influence (if any) legal and regulatory frameworks have on industry practices. For example, what guidelines or boundaries does a country’s legal framework offer on debt collection? Is there a prescribed manner in which MFIs can collect a past due debt, including how to go about the seizure, valuation, and the sale of collaterals? Is there a limit to the length of time which a borrower is legally responsible for a debt? What are MFI practices regarding collection post write-off? Are there any insolvency or personal bankruptcy provisions available to debtors, either by law, or through voluntary debt counseling centers? More importantly, if the legal framework does exist, is it enforced? Are MFIs aware and in compliance with requirements? And, lastly, there does not appear to have been any industry research on the consequences of default from the client perspective.
The Smart Campaign is very interested in these topics, as are many practitioners we have been in touch with. Thus, this month, to kick-start a larger investigative project, CFI invited endorsers of the Smart Campaign to take part in a survey that asked MFIs about practices related to default. We believe that collection, analysis, and dialogue around such information can help the industry improve how it handles clients in arrears, and perhaps how to salvage, versus sever, relations with clients who have defaulted.
> Posted by Madeleine Dy, Program Specialist, CFI
The Investing in Inclusive Finance program at the Center for Financial Inclusion at Accion explores the practices of investors in inclusive finance. Across areas including risk, governance, stakeholder alignment, and fund management, this blog series highlights what’s being done to help the industry better utilize private capital to develop financial institutions that incorporate social aims.
“What does he know that I don’t know?” This is exactly the question proponents of peer learning want to provoke. In academia, peer learning has received significant attention and new peer learning communities are sprouting up around the world. From the virtual Peer 2 Peer University, or P2PU, which was founded in 2009, to the Indian non-profit Avanti with its peer Learning Centers in India, to more informal community-driven websites like Skillshare where anyone can teach anyone else about a skill.
The Center for Financial Inclusion at Accion (CFI), the Boulder Institute of Microfinance, and Calmeadow Foundation are applying the power of peer learning in our upcoming “Governance Leadership in a Competitive World” seminar in Mexico City on October 3-4, 2013. The seminar asks MFI board members and CEOs to come together to address governance and risk challenges microfinance institutions are facing. The seminar will employ a highly interactive combination of case-based peer discussion, experienced industry speakers, and problem-solving.
Peer learning actually isn’t a new concept. It had its birth around 1916 with education thinker John Dewey’s Constructivist Theory which asserts that knowledge is created through experience, rather than through the usual teacher to student lecture and memorization. Paulo Freire, the Brazilian development guru, took it a step further with his 1968 book Pedagogy of the Oppressed, which critiques traditional teaching frameworks that treat students as empty vessels into which knowledge is deposited. Freire challenged society to ensure that all participants in the classroom, both teachers and students, work together to create knowledge equitably.
Facebook
Twitter
Recent Comments