Table 2.
Overview of informal credit types and associated conditions
| Type of credit and characteristics | Advantages and disadvantages | Frequency of use for health care* | Level of economic risk** | |
|---|---|---|---|---|
| Short-term loan (Luy Roab) |
|
+++++ |
++++ |
|
| · Short lending period: 10–20 days |
· Quick, easy access; addressing urgent requirements |
|
|
|
| · Relatively small amounts |
· High interest rates coupled to daily repayment |
|||
| · Daily repayment |
|
|||
| · High interest (20%), to be paid as extra days of repayment |
||||
| · Common in areas with commercial activities |
||||
| · Usually no requirement for collateral or paper work |
||||
| Medium-term loan (Luy Ruos) |
|
+++ |
+++ |
|
| · Lending period few months to a year |
· Large amount for relatively long period |
|
|
|
| · Relatively big amount |
· High interest rates and requirement for collateral, making it less accessible for poor people |
|
|
|
| · Interest rates of 5-10% per month |
|
|
|
|
| · Deadline for repayment |
|
|
|
|
| · Collateral required as well as official transaction |
|
|
|
|
| Seasonal loan |
|
++ |
++ |
|
| · In-between season lending: 6–10 months |
· Easy access for farmers |
|
|
|
| · Relatively big amounts |
· Repayment follows the farming cycle which is convenient for rural people |
|
|
|
| · Interest rates of 50-100% for the season |
· Repayment in kind, just following harvest when prices are low |
|
|
|
| · Repayment after harvest, in crops |
|
|
|
|
| · Very common Simple or no conditions |
|
|
|
|
| Loans for unspecified period (Luy Ngoab or Luy Chho) |
|
++++ |
++ |
|
| · Unspecified period |
· Easy access for the poor |
|
|
|
| · Variable amount |
· Absence of repayment deadline is favourable for poor people |
|
|
|
| · Relatively high interest: 1%/day; 5-30%/month |
· High interest rates, |
|
|
|
| |
· requirement for collateral for big amounts |
|
|
|
| · Flexible timing for repayment |
|
|
|
|
| · Collateral for large amounts |
|
|
|
|
| Loans with repayment in labour (Yok Dai) |
|
+ |
+ |
|
| · Variable, though mostly short, lending period |
· Easy access, especially for the poorest |
|
|
|
| · Relatively small amount |
· No money required, independent of cash flow |
|
|
|
| · Interest of 100% for whole period |
· Undervalued labour |
|
|
|
| · Repayment in labour valued at 50% |
· Hampers foraging on which poor depend for survival |
|
|
|
| · Only available in rural areas |
· High interest rates |
|
|
|
| · No lending conditions |
* rated from the less frequent ‘+’ to the most frequent ‘+++++’; ** rated from the lowest ‘+’ to the highest ‘++++’.