A very common mistake in the Credit Regulations or Manuals of Overindebtedness of some Microfinance Institutions, is the incorporation of maximum ratios of patrimonial indebtedness, without taking into account the lines of business. That is, to measure in the same way a carrier, a merchant, an industrialist, a service company, etc., without considering the different types of financing structures, of each of these lines.
In most cases, the maximum equity debt ratios are usually between 70% and 90%, in accordance with the lower risk appetite that is intended to be achieved.
Sometimes, it is customary to consider up to two maximum equity debt ratios: one for working capital and the other for fixed assets.
However, according to statistics from the supervisory body, the default in the SME segment is still the highest in the Financial System. Thus we have that at the end of August 2011, the average backlog in micro and small companies was 7.13% and 6.43%, in the Municipal Savings Banks System; and 5.58% and 8.06%, in the Rural Savings Banks System, respectively. Therefore, what is intended is not being achieved.
So what's going on?
Something very worrying, given the lack of realism of the maximum ratios of patrimonial indebtedness, some Business Advisors misrepresent the information of the client's business, in order to "adapt" it to what is required by the Entity. Yes to this we add the bad evaluation for the application of inappropriate credit technologies (in the case of small companies) and the poor preparation and / or experience of some Business Advisors (in the case of micro companies), we find an explosive mixture, which The bill begins to pass us.
So, what to do?
First, the average equity debt ratios should be calculated for each line of business. If it is not possible to obtain said information, due to the absence of data within the Institution, it should be acquired from third parties.
Second, the average equity debt ratios should not be determining factors in the evaluation, but should be complemented with the coverage ratios (New Loan Fee / Available Balance).
Third, risk appetite should be measured through minimum coverage ratios. Where possible, by line of business.
Fourth, credit technologies should be adapted to each type of credit, since evaluating a microcredit is not the same as a small business. Let us not forget that microfinance credit technology was born to evaluate micro-businesses (read: small wineries, market stalls, street vendors, informal, etc.) and has erroneously spread to all types of loans (I have seen cases, which even And, finally, one should be demanding in the evaluation of credits and drastically sanction the bad practices of some Business Advisors, who should be registered in a Risk Center, to be shared by all the Microfinance Entities.
