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Micro-lenders seek longer loan default threshold
Amfi-K data shows that the micro-lenders closed March this year with an NPLs ratio—a share of loans for which interest has not been received for at least 30 days—at 14 percent.
Micro-finance lenders want a longer threshold of three months before disbursed loans can be declared as non-performing, to ease repayment pressure on borrowers and shield the sector from elevated provisioning costs that erode profitability.
The Association of Microfinance Institutions of Kenya (Amfi-K), which comprises 91 entities, says that the current rule requiring loans to be classified as in default after just a month forces them to pile more pressure on borrowers, unlike banks that enjoy a three-month window.
