As the global recession picked up, we noticed our PAR (portfolio at risk) rates creep up as the sources of income which clients had previously been able to rely on slowly dried up. More and more clients have been put in a position where they are unable to pay back their loans on time. At AMK we noticed that our delinquency problems were concentrated in certain villages. This put us in a unique position to help our over indebted clients in a relatively efficient manner. If we could come up with a plan to help these villages, we could lower our PAR rates without resorting to pressuring our clients to sell their land or houses as we have seen other MFIs do over the last year.

Recently we launched a Delinquent Client workout program where we hire teachers to train our clients to make sellable goods. We provide them with an additional loan, which we call a workout loan, to purchase equipment such as sewing machines. Then our trainer teaches them to make quality goods. We provide them with the material and they get paid on a per-piece basis.

Luckily for us, an AMK employee, Sanjaya Punyasena, has been working on a side-project Ahkun.org. Ahkun.org is a website which sells goods make by recipients of microloans that have been funded on Kiva.org. With the blessing of our board, AMK will partner with Ahkun to sell the goods made by these delinquent clients on the website. Normally, AMK receives 25% of the profits sold on the site, but we are going to give that 25% to the clients so that they will receive 50% of the profits. They will use that money to pay off their loans.

For us to stay in business we need to collect the money that we lend.  This strategy gives clients the opportunity to work out of their situation.

We hope that you will support us in this venture. Look out for products made by our clients on ahkun.org.

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