How can MFIs ensure clients have no loans from other organisations?

This is a challenge. There are some regulations in place, but there is no public client database with loan information. Furthermore, information on loans from loan sharks is, by nature, not easily available. For these reasons it is essential potential clients are thoroughly evaluated before a loan is approved. Loan officers must be trained to ask the right questions and collect as much information as possible from a potential client to have an accurate picture of his or her financial situation. It is essential microfinance institutions do not pressure their loan officers to disburse loans, regardless of the circumstance.

It is imperative our project partners ensure candidates have the ability to repay their loan. When deciding whether to finance a loan, we encourage our project partners to:

• Do their utmost to investigate other loans the potential client may already have (whether this is from a loan shark or other microfinance institution) and minimize the risk of further financial hardships.
• Evaluate whether plans for the loan are financially viable and sufficiently income-generating.