Savings and loan associations expand lending in rural credit by 14.3%
Lending by savings and loan associations has made a comeback to growth in 2016. According to data from the Bank of Albania, the loan portfolio of such associations in 2016 amounted to 5.5 billion ALL, increasing by 14.3% compared with a year ago.
This result represents a significant turning point after the collapse that lending in this sector suffered in 2015.
Microfinance, and in particular savings and loan schemes, are an important factor in financing the economy, especially in rural areas.
Although the total value of loans in this sector accounts for only 1% of total lending in the economy, savings and loan associations offer one of the most successful funding schemes for small farmers.
Savings and loan associations have filled the gap of financial services in areas where banks or large institutions do not operate due to low profitability.
Starting from 2017, savings and loan associations have been officially included in the deposit insurance scheme, which constitutes an important basis for their further consolidation.
In 2016, public’s deposits in these companies grew by 30% and reached a value of about five billion ALL.
Now, such deposits cover 88% of the loan portfolio, while three years ago they used to finance just 65%.
Supporting members through loans makes savings and loan associations more independent vis-a-vis foreign financial channels, but also strengthens the relationship with membership.
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