Microcredit organization clients in BiH submitted 10,863 requests for loan payment deferral

(Patria) - The Association of Microcredit Organizations in Bosnia and Herzegovina – AMFI continuously monitors the work of its members and regularly communicates with regulatory agencies (Banking Agency of FBiH and Banking Agency of RS), and currently does not have information about the collection of additional interest rates for microcredit users, which has been discussed in the public in recent days.

“After this information appeared in public, we initiated activities to verify the allegations. We emphasize that AMFI opposes any actions of microcredit organizations contrary to the decisions of the banking agencies of FBiH and RS, which are not in the client's interest and harm the entire sector. AMFI members and AMFI very well-meaningly accept all suggestions and criticisms according to which we will promptly act wherever they are factually established,” said Elma Zukić, President of AMFI.

AMFI also warns that a number of information comparing banks and microcredit organizations has recently appeared in the public. Banks and microcredit organizations cannot be compared, because the primary mission of microcredit organizations is to ensure access to financial resources for those categories that do not meet the conditions for access to traditional financing models.

According to her, by April 24, this year, 10,863 clients of microcredit organizations in BiH, members of the Association of Microcredit Organizations in BiH – AMFI, applied for the application of some measures for deferring microcredit payments as support measures to overcome the negative effects of the COVID-19 pandemic. So far, 8,008 client requests have been approved, which represents about 74 percent of all received requests, and is continuously and urgently being implemented daily. 

AMFI reminds that in accordance with the decisions of the banking agencies of FBiH and RS, microcredit organizations are implementing measures to mitigate the consequences of the COVID 19 viral disease, trying to approach each client individually in order to find an optimal solution in overcoming difficulties with microcredit repayment, but also to provide support in overcoming liquidity problems for those clients and activities that continue to operate even in extraordinary circumstances. 

All microcredit organizations in BiH, in accordance with the decisions of the banking agencies of FBiH and RS, have offered their clients the possibility of a moratorium on microcredit repayment, rescheduling and refinancing with the possibility of a grace period and various modalities of interest rate treatment and repayment extension periods.

AMFI reminds that the microcredit sector largely supports and finances small farmers and entrepreneurs who do not have access to banking services and depend entirely on the support that microcredit organizations have been continuously and qualitatively providing them for almost 25 years.

It is estimated that about 70 percent or about 150,000 microcredit organization clients have access to credit funds exclusively through the microfinance sector, i.e., about 600,000 citizens of BiH rely on the support of the microcredit sector, directly or indirectly. Agricultural activity financing holds a significant share in all approved microcredits, with a share of about 35 percent.

AMFI states that it should be kept in mind that microcredit organizations, along with other financial sector entities, will be the backbone and an important tool for economic recovery after the coronavirus pandemic, just as they were after the 2014 floods, when the microcredit sector significantly participated in the economic recovery of clients and communities in affected areas.