Risks Inherent in Microfinance Bank
Tunde Raji - June 2, 2016

In every organization, risks cuts across all board but measures taken in managing risks is worthy of note. Hence, risks in microfinance banks cannot be over-emphasized. While some risks are avoidable, some risks are inevitable.

For instance, the risks inherent in credit administration of microfinance bank include: direct lending risk, contingent lending risk, issuer risk, settlement risk, clearing risk, equity risk, price risk, liquidity risk, disclosure risk, and documentation risk.

Follow Me On Social Media

30 thoughts on “Risks Inherent in Microfinance Bank”

  1. Quality and proper due diligence is prerequisite to successful loan performance. MFBs must improve the quality of their assessment, invest in training and re-training of staff. This will help to reduce the inherent risk.

  2. Good site! I really love how it is simple on my eyes and the data are well written. I am wondering how I could be notified whenever a new post has been made. I’ve subscribed to your RSS which must do the trick! Have a great day!

  3. Risk is an inevitable factor in business and it’s an every day occurrence in the life of any organization. Risk is worth planning for in order to avoid being taken unaware by unforeseen circumstances of life. To achieve any business success, we must encounter with risk of different dimensions which I may not have enough time to mention all here but the most common of risks in business are operational, liquidity, investment, credit and managerial risks. And microfinance banks or institutions are not exceptional.

  4. But the stronger your risk base is, the more you don’t lose cash but the higher you loose customers. To me, there should be a bit of flexibility. Thank you

  5. The Chinese defines risk as a mixture of Danger and Opportunity. Risk is embedded in all our activities in the banking sub-sector. Hence, individual organizations should put in place a strong Risk management team who will be saddled with the responsibilities of risk identification, profiling, mitigations amongst others. The CBN prudential guidelines have also provided or considers risks in a consolidated basis and grouped them into; Credit, market, Operational, Liquidity, Legal & regulatory, strategic risk. Unfortunately too, majority of MFBs concentrates majorly on credit risk leaving other types of risk unattended to. The result in the end is an undesirable one. The first MFB in Nigeria didn’t go down in year 2009 because of credit risk, but on other kind of risk which was not given needed attention. On the final note, if we don’t do risk management, crisis management is inevitable.

  6. Most MFB don’t know this; Applying Risk Management Process: identifying, analyzing and evaluating the risk itself. And also, transfer the risk to the third party e.g insurance etc
    Lastly, decision and approval by management to accept remaining risk after treatment process is concluded which the risk must be communicated and monitored.

  7. “Great Blogpost! Sorry for my English.I have been reading out a few of your_ stories and i can claim nice stuff. I will surely bookmark your site.”

  8. “Great Blogpost! Thanks for sharing your info. I really appreciate your efforts and I will_ be waiting for your further write ups thank you once again.”

  9. I simply want to mention I am all new to blogging and definitely love your web-site. Probably I’m going to bookmark your website . You actually have impressive posts. Thanks a bunch for sharing your web page.

  10. I precisely desired to thank you very much all over again. I’m not certain the things that I might have created in the absence of those secrets contributed by you over this field. It absolutely was a challenging concern for me, nevertheless being able to view the very well-written manner you processed that made me to cry over fulfillment. Extremely happier for your assistance and then expect you comprehend what an amazing job that you are getting into instructing the rest thru your blog. Most probably you’ve never got to know any of us.

  11. It’s actually a nice and useful piece of info. I am satisfied that you shared this useful info with us. Please keep us up to date like this. Thanks for sharing.

Leave a Comment

Your email address will not be published. Required fields are marked *

About Tunde Raji

Follow Me On Social Media

Categories

BlogRoll

microfinance blog