MANAGING NON-REPAYMENT RISK THROUGH GROUP-BASED LENDING IN MFIs

Abstract: To analyze how MFIs are managing their non-repayment risk by using GBL approach. The deductive approach has been used in this study and the case study method is deployed. Khushhali Bank Limited, Pakistan has been taken for the subject MFI. The four inter-related theories have been taken into consideration, namely Portfolio, Principal-Agent, Contract and Transaction Cost Theories, to have a detailed literature review about the threat of non-repayment risk through GBL. The study chalked out a result that by combining diversified members in a group under GBL approach, MFIs can able to minimize their non-repayment risk.