ProCredit Bank Leads Armenia’s Microfinance Sector with $82 Million in Loans

A Leader Emerges in the Armenian Microfinance Market

In 2012, ProCredit Bank disbursed an impressive $82 million in loans to small and medium-sized enterprises (SMEs) in Armenia, according to data from MIXMARKET. This remarkable achievement has solidified the bank’s position as a leader in the country’s microfinance sector.

Focus on Group Lending: A Key Factor in Success

Hrant Bagratyan, former Prime Minister of Armenia and field expert, attributes ProCredit Bank’s success to its focus on group lending. This approach enables the bank to effectively reach rural communities and marginalized populations, which are often underserved by traditional financial institutions.

Growth of the Microfinance Sector in Armenia

The microfinance sector in Armenia has experienced significant growth over the past decade, thanks in part to the efforts of international organizations such as World Vision, OXFAM, and Save the Children. The country’s transition from a planned economy to a market-based economy has led to an increase in unemployment and poverty, highlighting the need for innovative financial solutions.

ProCredit Bank’s Successful Strategy

ProCredit Bank’s strategy involves offering group loans to self-employed entrepreneurs engaged in trade, as well as individual loans to micro and small business owners. The bank’s ability to build close relationships with borrowers and manage long-term relationships has enabled it to deliver high-quality services and achieve impressive loan repayment rates.

Competition in the Market

The commercialization of microfinance has led to increased competition between commercial banks and universal credit organizations (UCOs) in Armenia. However, ProCredit Bank’s focus on specialized lending has allowed it to maintain its market share and establish itself as a leader in the sector.

Reputation and Fulfillment of Lending Requirements

Aregak, a microfinance institution operating in Armenia, notes that the most successful practices are those that prioritize reputation and guarantees fulfillment of lending requirements. ProCredit Bank’s commitment to these principles has been instrumental in its success.

Conclusion

With its impressive loan disbursements and commitment to adapting to the changing needs of the Armenian market, ProCredit Bank has cemented its position as a leader in the country’s microfinance sector. Its focus on group lending, specialized lending, and reputation have all contributed to its remarkable success.