Delinquency is when loan repayments fall behind schedule. Managing it well protects your income and your members' savings. The key measure is Portfolio at Risk (PAR), and the key habit is acting early.
Why it matters: A late loan rarely fixes itself. The longer arrears age, the harder they are to recover, and bad loans quietly drain interest income and force you to set money aside as provisions.
Measure it: PAR and arrears aging
PAR is the outstanding balance of loans in arrears divided by your total loan portfolio.
Always state the days, e.g. PAR30 (over 30 days late). Track PAR30 and PAR90 together.
If PAR30 falls but PAR90 rises, loans are aging through buckets without being resolved.
A PAR30 above 10% is a clear warning sign.
In CAMS, loan reports surface PAR and arrears aging so you can spot trouble early.
The real cost of bad loans
Provisioning — you must reserve money against loans at risk, locking up capital.
Lost interest — a non-paying loan earns nothing while you still owe savers.
Staff time — chasing arrears pulls effort away from new, healthy lending.
A simple recovery ladder
Reminder — a call or message as soon as a payment is missed.
Visit — meet the member, understand the cause, agree a plan.
Restructure — reschedule terms only if repayment ability is genuine.
Guarantor / collateral — call on guarantors or security as a last resort.
Prevent it in the first place
Strong appraisal up front stops most defaults before they start.
Monitor repayments weekly, not at month-end.
Follow the ladder consistently so members know you act.
