Do poor people pay high interest ratesFrom the internationally successful microfinance practice microfinance poverty and low income is more concerned about loan availability, convenience, finance company loans as long as they can win, they can accept the relatively high interest rates.
because of the absolute volume of loans is very small, compared to poor clients, especially the income of non-farm micro-enterprises and their full costs, microfinance interest costs than are generally not high, can all be paid for.
in Indonesia, commercial interest rates are 18%, and micro-loan rate is above 28%; in Bangladesh, the commercial interest rate 10% 3%, micro-lending rates in 20% a 35%. High interest rates enough micro-credit and credit one of the distinguishing characteristics of ordinary commercial banks.
setting is too low for sustainable microfinance interest rate caps would hamper the access of the poor to financial services.
when microfinance institutions have to face interest rate cap limits, because the Agency cannot cover its operating costs, they are often withdrawn from the market, microfinance development slower, or reduced their higher costs in the rural area or other area of business.
therefore, interest rate ceilings do not necessarily protect poor borrowers, loan companies, in contrast, may also reduce their access to financial services the possibility of them.