Abstract: The study looked into microfinancing in rural areas its sustainability. Surveymethod of research was used. Borrowers of the studied rural banks were also randomly selected and interviewed using a survey instrument. Rural banks offering microfinance loans have common charges levied to borrowers. The respondents of the study are limited only to rural banks offering microfinance loans. Results showed that collection rate from microfinance loans of these banks declined in a span of three years. This lead to rural banks adopting strategies in collection namely group back-up and withdrawals of clients saving to cope their amortization. Respondents are entirely vendors thus payment of loans is determined through sales performance. Other reasons include occurrence of typhoon and illness of the vendor as borrower. Rural banks must also design contingencies on the aspect of the borrowers other than Loan management model that ensures loan funds are invested directly in productive business must be carefully monitored among personnel to increase bank measures on default payments.
Keywords: Microfinancing, Rural Banks, Rural Area, default payments.
Title: Microfinancing in Rural Areas: It’s Sustainability
Author: Amiel B. Andias, Jay A. Roslinda
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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