Library Videos Understanding Over-Indebtedness

Understanding Over-Indebtedness

27 Sep 2013 1984

This video talks about over-indebtedness. The subject is ranked by microfinance industry stakeholders as the top risk facing the industry in 2012. Simply put, over-indebtedness is a situation where one takes on too much debt beyond one's capacity to pay. When faced with such situation, the poor takes on further sacrifices in basic quality of life including asset erosion. As if this is not harmful enough, the poor also has to contend with threats and harassment for inability to pay on time from some staff and other clients of financial institutions. Though complex, over-indebtedness need not be considered a debt trap by low-income clients. It can be addressed by an industry with firmer resolve to understand the condition and needs of clients and committed to improving products and services tailor --made to clients' evolving requirements.

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  • JR

    Mesay Matusala, VisionFund Ethiopia MFI on 1/10/13

    The conclusion seems confusing. Over-indebtedness obviously can be reduced by providing timely and sufficient credit services to clients. In fact not all clients who take multiple loans are severely affected by over indebtedness but majority of clients really suffer from the adverse effects of it. Therefore, the conclusion shall show a concrete solution to this global MF industry evil.

  • JR

    Satish Kalra, Center of Excellence in Banking on 28/9/13

    A very well researched and nicely presented case. Congrats. I will however like to underline that the credit needs of clients if supplemented with some literacy can bring about lot of improvement in this segment. The micro finance clients generally are self employed. They run micro enterprises. The beauty of micro enterprise is that they have direct relationship with their clients. On the other hand the delivery outlets of business chains manned by their employees treat their clients as a database only. However the business chains have brand value which the micro enterprises don't have. If the MFI's can have tie up with training institutes or SPV's doing hand holding for micro enterprises and help them establish relationship with big brands the synergies will emerge. Unfortunately MFI's focus only on credit and donot associate with anything like this. I will like to knwo if Micro Save has identified any such attempts anywhere.

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