Glossary » Microfinance Terms

Individuals, groups or organizations with active credit or savings accounts (excluding remittances or other financial transactions) or clients who have had transactions with the MFI during the reporting period.

Social responsibility to clients is a fundamental dimension of an MFI’s social performance. This indicator is linked to The Campaign for Client Protection in Microfinance, which seeks to unite microfinance providers worldwide to develop and implement standards for the appropriate treatment of low-income clients based on the following six principles:

Avoidance of Over-Indebtedness;
Transparent Pricing;
Appropriate Collections Practices;
Ethical [...]

Percentage of clients who had no transaction on credit and/or savings with the MFI for over 12 months.
This formula calculates drop-outs as a percentage of clients who were at some time during the period accessing financial services but are no longer doing so: Total number of clients at the beginning of the reporting period+ New [...]

Refers to how financial services are delivered to the client - whether through an individual loan strategy or group lending strategy. Methodologies may be provided through any of the following means:

Individual loans: A loan made to an individual borrower who is solely responsible for its repayment
Solidarity group: A loan group made up of approximately 3–10 [...]

A loan made to an individual borrower who is solely responsible for its repayment.

A self help group is a group of 10 to 20 poor women who band together for financial services and sometimes social services. SHGs typically begin with periodic, compulsory savings and then move on to making loans. SHGs are managed by their members with varying degrees of external support.
SHGs are formed with the assistance of [...]

A loan group made up of approximately 3–10 people drawn from the same community and where group members collectively guarantee loan repayment.

As in solidarity groups, loan repayment is guaranteed by collective membership, but loan groups are bigger,  made up of approximately 20–30 people (typically women).

Individuals who currently have funds on deposit with an MFI on a voluntary basis.i.e. they are not required to maintain the deposit account to access a loan. This number applies only to deposits that are held by the MFI, not to those deposits held in other institutions by the MFI’s clients.

Individuals, groups or organizations with active credit accounts with the MFI (clients who have had transactions with the MFI during the reporting period).

Individuals, groups or organizations with active savings accounts (excluding remittances or other financial transactions) or clients who have had transactions with the MFI during the reporting period.

The declining balance method is a way of calculating interest: interest is charged only on the amount of the loan principal which the borrower has not yet repaid.