The World Bank’s CGAP (Consultative Group to Assist the Poor) has released an updated version of its “Due Diligence Guidelines for the Review of Microcredit Loan Portfolios: A Tiered Approach,” which offers techniques to assess the extent to which microfinance institutions (MFIs) are likely to collect on their loan assets. CGAP asserts that, while “the biggest source of risk in most MFIs is the loan portfolio…external audits, ratings and evaluations usually don’t provide a reliable check for portfolio problems.” The updated guide offers a range of approaches for assessing MFI loan portfolio performance and management, depending on the amount of time and money available for the effort.

Sources and Resources:

“Due Diligence Guidelines for the Review of Microcredit Loan Portfolios: A Tiered Approach” by Robert Peck Christen and Mark Flaming
http://www.cgap.org/p/site/c/template.rc/1.9.36521/

CGAP (Consultative Group to Assist the Poor):
http://www.cgap.org/

CGAP “Due Diligence” summary:
http://www.cgap.org/p/site/c/template.rc/1.26.12403/