Microfinance repayment performance in Bank Rakyat Kangar branch

Microfinance is offered by Bank Kerjasama Rakyat Malaysia Berhad to the customers who want to expand their business. However, there are existing customers facing problems in resolving the repayment of microfinance as per agreed period. This poses a risk of overdue payments that may affect the
performance of the customer as well as the bank. Thus, this study was conducted to achieve three main objectives. Firstly, to identify the main process of microfinance in Bank Rakyat Kangar. Secondly, to explore factors affecting the repayment performance of microfinance among Bank Rakyat Kangar
customers. Thirdly, to identify business problems faced by Bank Rakyat Kangar microfinance customers. Fourthly, to examine the mechanisms used by Bank Rakyat to address the problem of microfinance repayment among Bank Rakyat Kangar customers. The method of qualitative research is applied and data collection is in-depth interviews and guided by documents related to microfinancing. The interview process involves eight customers and two microfinance officers at Bank Rakyat Kangar. Content analysis is done on the data and information obtained from the interview. The findings show that the
main process of microfinance in Bank Rakyat Kangar is based on certain condition. The main factors affecting repayment performance are the decreasing of income in business, family problems, and influenced by another financing factors. All informants interviewed revealed different business problems such as business competitors, the problem of customers and low marketing product sales. Bank Rakyat runs two mechanisms system to overcome the problem. Firstly, the system of monitoring and online action updating. Secondly,
reporting for follow up action on the customer. This study contributes significantly to knowledge on microfinance scheme, in general, to facilitate customers and other entrepreneurs to capitalize the business in order to ensure the repayment consistency in the future.