The document summarizes a study on client defaults conducted by an MFI operating in Delhi suburbs. Key findings include: - The proportion of defaulter clients to repayment clients was found to be 22%. - Reasons for default included wilful defaults, migration, economic crises, and concealment of information by clients. - Costs of defaults included financial costs shouldered by repayment clients to make up for defaulters' missed payments, as well as transaction costs and hardships. - However, the MFI ensures a 100% repayment rate through strict collection processes and incentives tied to on-time repayment, as well as by closing centers with high defaults.

1. Microfinance Researchers Alliance Workshop Center for Microfinance, Chennai 6 th August, 2010 Proportion of Defaulter Clients to Repayment Clients: Two sides to a story Mani Arul Nandhi Jesus and Mary College Delhi University This study is sponsored by MRAP, whose funding and support is gratefully acknowledged by the researcher. A special word of warm appreciation to Deepti, K.C, whose untiring efforts to help us to learn, participate, contribute and above all, to achieve our best under MRAP is commendable. Last but not the least my gratitude to Justin, Executive Director, CMF, Chennai is greatly acknowledged.

5. * Figure in parantheses refer to number present on day of meeting S.No Centres No.of JLGs met No.of members in each centre * Nature of group 1 Toli Mohalla 4 20 (17) Muslim 2 Prashant Vihar 3 15 Mixed 3 Laxmi Garden 3 15 Mixed 4 Shiv Vihar 3 15 Mixed 5 Anand Vihar 2 10 (5) Hindu 6 Vikas Nagar 2 10 (9) Hindu 7 Jamalpura/247 4 20 (16) Muslim 8 Ashok Vihar 4 20 Muslim 9 Giri Market 2 10 Muslim 10 Jamalpura/34 3 15 (12) Muslim 11 Daburtalab 3 15 Muslim 12 LaxmiGdn/233 2 10 (9) Mixed 13 LaxmiGdn/158 2 9(2) Hindu 14 LaxmiGdn/254 3 15(9) Hindu 15 Toli Mohalla/36 2 10 (6) Muslim 16 Toli Mohalla/39 4 20 (16) Muslim 17 Rajeev Gdn 2 10 (8) Hindu Total 17 48 239 (199)

8. Findings: Defaulter Clients to Repayment Clients Centre No. of Clients Repayment Clients Number Defaulted No. of EMIs Paid No. of EMIs Pending Centre/Grp Leader or Member Vikas Nagar 10 9 1 4 48 CL Anand Vihar 10 9 1 8 44 CL Rajeev Gdn/ 245 15 14 1 44 8 Member Rajeev Gdn/ 213 10 8 2 22 30 Member Naipura 15 14 1 30 22 Member Naipura 20 19 1 30 22 Member Julie centre 10 8 2 48 4 Member Albi Nagar 10 8 2 12 40 Member Mustafabad 15 11 4 NA NA Member Shiv Vihar 10 6 4 NA NA Member Ikram Nagar 10 4 6 NA NA Member Sangam Vihar 10 5 5 NA NA Members

9. Findings: Defaulter clients to Repayment clients.. Cont’d Centre No. of Clients Repayment Clients Number Defaulted No. of EMIs Paid No. of EMIs Pending CL/GL Member Pooja Colony 10 9 1 NA NA CL Budh Nagar 10 5 5 NA NA CL & M 78 10 7 3 NA NA Member 31 20 14 6 NA NA Member 56 10 8 2 NA NA CL & M 18 15 12 3 NA NA Member LakshmiGdn 9 8 1 45 7 Member Mustafabaad 20 19 1 8 44 Member Ambica Vihar 10 9 1 NA NA Member 36/Toli Mohalla 20 19 1 13 39 Member Saraswati Vihar 10 9 1 30 22 Member

10. Findings: Defaulter clients to Repayment clients Centre No. of Clients Repayment Clients Number Defaulted No. of EMIs Paid No. of EMIs Pending CL/GL Member Lakshmigdnn/237 15 14 1 35 17 Member Laksmigdn 254 15 14 1 32 20 Member Lakshmigd/233 10 9 1 14 38 Member TOTAL 26 centres 339 279 60 375 For 17 clients 398 For 17 clients

11. Findings: Defaulter clients to Repayment clients N Data NA Average Percent Centres 26 Loan Clients 339 Repayment Clients 279 Number Defaulted 60 EMis Paid 435 (N= 17) 25.6 (N = 17) 50 EMIs Defaulted 449 (N = 17) N = 43 26.4 (N = 17) 50 Defaulters to Repayment clients 60 / 279 = 21.5 % or 22%

13. Some snapshots of defaulters’ profile N % Centre Leader/Grp leader 8 13 Members 52 87 Wilful Defaulters 16 27 Ran away 8 13 Moved/migrated 6 10 Remarried/widowed 2 3 Difficulty in repayment Due to crises/poor 6 10 Data NA 26 44 Well off 10 17