Last month I blogged rising loan delinquency at the Grameen Bank. Here's an update.I have twice e-mailed Grameen Bank's Chief Financial Officer, Md. Shahjahan, the first time four weeks ago, hoping to learn more about what is behind the numbers. I also sent a message to Professor Yunus. I have received no reply.The Bank just released its February numbers. Here's an update of an earlier graph:
The spreadsheet is still here.As I wrote before, this graph is for "basic loans" only, excluding "flexible loans." The latter were introduced about ten years ago as the Bank recovered from the late-1990s delinquency troubles. Yunus has described the basic loan as Grameen's "micro-credit highway," the standard borrowing path. "Struggling members," can exit the highway for a time and get a flexible loan, whose payment terms are indeed more flexible. Then when they restore their good standing with the Bank, they can reenter the highway. For some members flexible loans are no doubt a welcome softening of the usually-rigid microcredit. Probably in other cases, however, flexible loans become a way to hide default. So from the point of view of measuring the Bank's health, flexible loans are an opaque category. And at 2.1 billion taka as of 10 days ago, flexible loans are a small part of the picture compared to basic loans (53.4 billion). For both these reasons, I left flexible loans out of the graph above.Reading two new CGAP reports (here and here) on the state of the microfinance industry helped me appreciate that an industry-standard measure of delinquency is Portfolio at Risk/30 days (PAR 30). For Grameen, it is essentially the sum of the red and green lines above. So I decided to compute PAR 30 for basic loans, and basic+flexible loans. About a quarter of flexible loans are reported as delinquent at least 30 days, which offers some reassurance that Grameen isn't simply sweeping all its delinquencies under the rug. This is a high enough to affect the overall basic+flexible average:
Is 5.06% a lot? Compare to Figure 5 of the CGAP reports by Greg Chen, Stephen Rasmussen, and Xavier Reille on recent microcredit crises in four countries:Update: Taking Daniel Rozas's suggestion (below) to look again at the other CGAP report, here is the me
dian PAR 30 for the SYM50 group of investible microfinance institutions. (Daniel is too modest to mention that he coauthored the CGAP report he refers to.) Grameen's current PAR30 is almost exactly the median (average) for the group:And here is a graph from the report with *median* (50th percentile; thank you Daniel) PAR30 for the group and some MIX averages:
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