Small loans to uneducated, under-privileged class: recovery rate is over 99 percent: CEO Agahe

The microfinance institutions and Non-Governmental Organisations working in Pakistan are contributing significantly to poverty alleviation by advancing small loans to uneducated and under-privileged class of the society where recovery rate of the loan is over 99 per cent.
In a statement issued by the Chief Executive Officer (CEO) of the Association for Gender Awareness and Human Empowerment (AGAHE) here on Wednesday, the CEO said that despite working in the far-flung areas of Pakistan, the microfinance sector could only reach 11.7 per cent of the people and has huge potential of expansion.
Referring to NGOs engaged in Microfinance activities, he said that only 3.3 million less privileged poor people are so far getting micro loans and trying to change their fate with this effort. He said that the microfinance sector recovery rate is over 99 per cent which is very encouraging as compared to conventional system where huge chances of loans defaults always exist. On the other hand, in microfinance sector majority of loanees return their loans considering it their obligation whereas no one goes for wilful default, he added.
The performance of small loans given to the underprivileged class during the last one decade by the microfinance banks and NGOs working in Pakistan have proved that the poverty can be alleviated from Pakistan by patronising such schemes, he maintained. Talking about the success story of his organisation, Sarwar pointed out that they started micro financing facility in Vehari district five years back with the grant of Pakistan Poverty Alleviation Fund (PPAF).
Earlier, a number of microfinance institutions failed in performing their duties and closed the programs. However, the AGAHE has taken it as a challenge and now above 99 per cent recovery rate has been achieved, he maintained. After success of microfinance in Vehari district, the organisation has expanded this service to Rajanpur district. Regular flood is the cause of failure of recovery of loan in these districts, Sarwar pointed out.
However, for AGAHE it is very encouraging that the recovery rate of loans in both districts is more than 99 per cent while more than 70 per cent of loan holders repeat their loan after successfully retiring the first loan cycle. In microfinance sector recycling of loans and repeating the loan by one person is very important and also success. Sarwar pointed out that more than 12,000 customers have taken loans from the origination while four branches are operated in the two districts which disbursed Rs 15,000 to 100,000 small loans to poor and poverty affected people there. Females are in majority of small loan clients who did small businesses at home alongside with their chores to share the financial burden of the family along with their male family members, he added.