Session-19: Understanding Basis of Service Charge and Interest Rates

 Course objective:

Through this Course the participants will understand the rationalities, justifications; and the basis for service and interest rates by the MFIs. It provides the cost structures and the basics of service charge / interest setting following MRA rules and PKSF guidelines

Course audience:

Field Officers, credit officers, Branch Managers, Management and officers of micro-finance institutions, finance managers

Course Contents:

• Microcredit cost structure and Justification of Interest Rates to Cover Costs
  • Financial Costs: Interest and Fees
  • Cost of Fund: Loan Loss and Inflation
  • Operational Costs: Salaries, Rents, Utilities etc.
• Basic Service Charge/Interest rate setting methods
• Calculation Of Service Charge and interest rates
• Understanding effective interest rates
• Costs of credit for the borrower
• MRA Rules and PKSF Guidelines on Service Charge and Interest rates
• Effects of ceiling on microcredit service charges/interest rates