Financial Institutions are expected to register a rebound in their turnovers, if the expected Rwf 1.2billion Non Performing Loans (written off loan debts) are recovered this year. Rita Ngarambe, the Executive Secretary of Association of Microfinance Institutions of Rwanda-AMIR, has noted that through the recently formed District Recovery Commission, people who have failed to pay back loans to financial Institutions will be taken to court to recover the money.
Financial Institutions are expected to register a rebound in their turnovers, if the expected Rwf 1.2billion Non Performing Loans (written off loan debts) are recovered this year.
Rita Ngarambe, the Executive Secretary of Association of Microfinance Institutions of Rwanda-AMIR, has noted that through the recently formed District Recovery Commission, people who have failed to pay back loans to financial Institutions will be taken to court to recover the money.
"We as AMIR provided the needed support and law regarding formation of these commissions and we believe this will give hope to our Institutions to increase their capacity to promote financial Inclusion,” she said.
The Commission under the Ministry of Justice and passed by parliament is waiting to be launched officially this year and will be working at district level. As of now, 307 cases worth Rwf 797,036,926 were convicted and are waiting to be legally enforced while 455 cases that amount to Rwf 487,619,205 are in the process of completion.
Rita noted that Microfinance Institutions have been facing challenges of loan recovery as many people tend not to pay back loans, causing the MFIs to operate in losses.
She further revealed that AMIR plans to continue programs on governance, risk management, elementary accounting, principles of operational risk, credit management and MFI governance, as well as marketing management to its members.
"In 2011, advocacy was one of the key activities for the development of the microfinance sector, and we look forward this year to strengthen it,” noted Ngarambe.
Francois Nsengiyumva, a businessman, said the initiative will help Microfinance Institutions ease restrictions they put on loans as they will be assured of getting back their money.
"But I believe the interest rate will also go down now that they will not be operating in losses,” he noted.