“Increased competition cut interest rates on microfinance loans”

“Increased competition cut interest rates on microfinance loans”

access_time2019-09-19 10:25:51

Since January 1 lending  regulations have been tightened  and  primarily hit irresponsible borrowers.  Apart from that, the standards for checking and evaluating the loan portfolio were also tightened that reduces lending, Beso Shengelia, Chairman of the Board of the Microfinance Organizations Association, says.

 According to Shengelia, due to regulations, the year began hard for the microfinance sector, but the situation is currently being stabilized.

“The market will improve, the number of healthy and less risky loans is growing. Unfortunately, many microfinance organizations closed as they had failed to  adapt their business model to new conditions in a very short time, and were forced to close. The lending area has declined, competition has grown significantly, and the market leaders showed more stability and ability to adapt to new conditions, ” Beso Shengelia notes.

In Shengelia’s words, increased competition cut interest rates on microfinance loans.

 “It is very good for the market and people, but is not good for  microfinance organizations in terms of profitability,” Shengelia believes.


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