BIO joins LocFund’s effort to tackle over-indebtedness and credit risks in Latin America

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LocFund is an Investment Fund providing financing in local currency to microfinance institutions in Latin America and the Caribbean. Widely focused on institutions with limited access to funding and less opportunities to optimize their financing structure, LocFund provides local currency financing reducing local currency devaluation risks.

While providing financial services, it is fundamental to ensure microfinance institutions are adequately knowing their clients’ repayment capacities; and not only ensuring that clients truly understand the particulars of products they adopt. Over-indebtedness may have drastic negative consequences. All possible efforts must then be undertaken to prevent markets from overheating, without holding back the desired market development in general.

In that view, mid-March 2012 LocFund organizes in Lima (Peru) a seminar on over-indebtedness and credit risks, using the financial support of BIO and Norfund. The seminar places great importance on avoiding over-indebtedness risks and promoting further responsible underwriting practices within LocFund’s investee’s network. Around 30 institutions are expected to join, gaining on their credit risk performance, improving their operational activities and generating better loan portfolio practices.